Have you ever been severely in debt?

[Julieinparis]

I’ve name changed for this. I am very scared and anxious.

I am likely to lose a significant amount of money in a messy property sale (relationship break up, house also has problems) and will be in quite a lot of debt. I am trying not to panic until it happens but my heart keeps racing and I can’t stop thinking about it.

Have you ever been significantly in debt and how did you recover? Have you ever gone bankrupt and how did it affect your life once you weren’t bankrupt anymore?

Do you have to sell the house now? Will you be in solo or joint negative equity? What does your solicitor say about your legal rights and responsibilities to the debt.

Don't rush into a decision that could handicap your financial future as a single woman.

Yes, I had a messy and traumatic divorce from a gambling addict who stole my credit cards and cleared out our joint bank account. I was in debt to the level of twice my yearly salary. I went into an IVA and it was the best thing I could have done.

Ps we had no property, savings or investments and my only asset was my pension, which he tried to get his hands on (but didn't in the end). Thankfully, we also had no children.

@YukoandHiro the house has to go on the market soon as neither of us can afford to keep it. It’s has substantial issues that we also cannot afford to remedy. Joint negative equity but applications are individual, ex partner earns less then me and I am unsure how he will pay his debt, I think he will also need to consider this route. Ex partner likely to try to leave all joint debt for me to pay anyway.

I had a very scary amount of debt and had to go bankrupt. The weight lifted off my shoulders instantly and it was the best thing I could have done. It’s been discharged now so slowly repairing my credit record but it’s basically screwed for the next 6 years. That doesn’t bother me though as I’m trying to live within my means and never want to get into debt again.

@Pinkandpurplehairedlady do you mind me asking how old you are? I’m scared for my future, I don’t think I will ever own a house again.

I’m 44. Have you tried speaking to Stepchange to see what your options are? I found them really helpful and non-judgemental.

Before committing to IVA or bankruptcy, check what effect it would have on your job/career. More and more jobs these days, it seems, require a "clean" financial history and a bankruptcy could result in loss of your future jobs/career, particularly if you work in financial services or security.

About 20 years ago I had about £40k in credit cards and loans due to a string of unwise decisions and trying to prop up a failing business/pay the bills with insufficient income. I entered an IVA to be freed from this but remortgaged out after a couple of years. However, the mortgage market has changed since then so this might no longer be an option. However, adverse information drops off your file after 6 years so it's not a life sentence as far as financial security is concerned and often it's better to do the short sharp shock method of dealing with the problem rather than trying to pay off unaffordable debt and seeing a lot of what you pay go on interest and charges.

Seek advice on your individual circumstances. Do not take on more than your fair share of debt, your ex will have to sort himself out. Do not fear bankruptcy, but be aware of the possible implications for some jobs.

Have a look at Moneysaving Expert. For some reason Mumsnet scrambles the links to that website but if you look at the debt help section and also the debt part of the forum, where you can get a lot of help and advice and signposting to further help.

Good luck. It might not seem like it at the moment, but there is light at the end of the tunnel.

I haven’t spoken to stepchange yet as unsure exactly how much debt I will be in. I just can’t stop thinking about the prospect, I’m under a lot of stress.

Happened to me when I divorced. Didn't realise my exdh had mountains of debts that I had 50% responsibilities for. I ended up defaulting on a 20k loan and 6k credit card. I spoke to the creditors and arranged a payment plan, it shagged my credit rating and meant I was paying these back for years. But I did it, and now I have an excellent credit rating and no debt. It's a hard lesson to learn but I'm much more financially savvy and hate any form of debt.

I didn't want to go bankrupt as this has no time limit and can have an ongoing impact, at least with a payment plan (I didn't go via an organisation, sorted it directly with the creditors. At one point when I couldn't work, I was only paying £1 a month as that was all I could afford) my credit rating recovered after 6 years.

Will the debt be with one individual provider? If so, then a DMP may be possible which won't be declarable on job applications. IVA needs the lender to consent and Bankruptcy is the 'nuclear' option. But it depends if you're talking £10k, £50k or £100k+

@ImBlueDab do you own a house now? How do you feel about your future? I have two small children and I am so worried about how this will affect them too.

@PoinsettiaPosturing it will all be with the bank who we have the mortgage with. It’s hard to know the amount, I have some hope in my heart that we can still sell it for what we currently owe. It could be over £100k though, it depends on who will take on the risk of fixing the problems with the house and at what price. It is a joint debt that I am fairly certain my ex-p will try to walk away from. If he will pay his share, I might be able to pay off mine but I don’t think he will be able to.

Yes I do own a house, it did impact me to a degree at the time. I owned a house (mortgaged) when we separated and I kept it. I had to remortgage to buy him out, but because of my credit rating I had to stay with the same company, as they didn't do a credit check, which meant I paid over the odds for interest rates.

I wanted to move for years as I hated it, but couldn't because of my poor credit rating and I couldn't afford it. But keeping the house was my priority and one of the reasons I wouldn't go bankrupt. My credit rating is fine now and 2 years ago I moved into my dream house with a good interest rate on my mortgage. I'll be 65 when I've paid off my mortgage, but that's fine. Some of my friends have already paid theirs, but I don't actually care as I know I'll get there someday.

Speak to your creditors, they have departments who will help you. Even if you pay £1 a month until you can afford it, that's ok. Once you do this, as long as you pay what you promise to pay, after 6 years your credit rating will return to normal. If you can afford it, id advise not to go bankrupt if you can as it will impact your house and you'll struggle to get a mortgage again/

Don't panic, be up front with your creditors, they will help you and won't judge you. The worst thing you can do is put your head in the sand, if your honest it'll be fine and your dc will be too

One thing you can do is ask for 'breathing space', which is an industry recognised term for them to not pester you for repayment for a few weeks while you put together a full picture of your financial situation and seek advice.

Approximately how much debt do you think you'll be left with, will this only be the mortgage shortfall or will there be credit cards/unsecured loans on top and who's names are these in?

What's your plan for housing following the house sale? If it's likely you'll be going bankrupt it might be worth stopping paying for everything now and concentrate on setting yourself up in a rented house before your credit rating is destroyed.

The advantage of formal debt solutions is that you only have to repay what you can afford after your normal living costs, so rent, bills, reasonable amount of food and travel, even a small emergency fund and discretionary income, because it's recognised that you won't be able to use credit and you're not expected to live like a monk while any debt repayment is made.

You're jointly liable if it's a joint mortgage, so if it's that amount then you'll probably both need to declare bankruptcy, if one does and one doesn't then yes the bank will chase the person who doesn't declare bankruptcy. Worth starting to look into the implications of this, the value of car you can own etc. If it turns out to be less then at least you knew the worst case scenario

Cross posted. If you have a joint mortgage you are 'jointly and severerly liable' which means that you're both liable for the whole amount and realistically, they'll come after both of you and chase after whoever is easiest to find.

I don't know how it works with joint debts if one of you wants to go bankrupt and the other doesn't. This is what you need proper advice on.

Joint debts - you are probably liable for the whole thing if he defaults. Joint debts are usually under the terms of "jointly and severally liable" meaning if one person doesn't pay, the other does.

This happened to me in my divorce. I was younger, there was no internet then, and it was only much later I realised he must have been forging my signature as I had never signed anything. He had skipped the country and left me up to my eyeballs in the debts.

The important thing is to get advice and don't shy away from facing the problem. Definitely contact Stepchange.

It took me 3 years to dig myself out of the massive hole, but I managed it and yes I did get another mortgage.

Many thanks @PoinsettiaPosturing and @BarbaraofSeville. Keeping the house is not an option, I can’t afford it on my own and it makes me feel stressed being there. I am currently renting and ex-DP is living in the family home. I am currently seeking legal advice in regards to the house issues so we can make full disclosure to any buyers. It will be a joint and severally liable debt if we do sell in negative equity so I will ask solicitor if they can help or if I have to get a new solicitor for this bit, as ex-dp involved in house sale legal stuff.

My debt was with multiple providers (banks, credit card companies, store cards) and the IVA worked well for this, the admin and being chased by multiple people was getting extremely stressful and affecting my mental health, to the extent that I could not concentrate on work (the work I needed to do to get myself out of the hole). As a professional, going bankrupt would have been a potential problem with my regulatory body, so be aware of that if applicable. No-one ever knew about the IVA.

Thank you all for your advice. I will also look into whether it will affect my career (maybe certain employers but i dont think my actual profession). Can it also affect the career of a new partner, if they are with someone who has been bankrupt?

Not their, unless in a role that stipulates it (like financial services/ bank)

but if you have linked accounts/ address it could impact their credit score

I’m just going through the process of helping a relative sort their debts out. And have done the same for someone else years ago. Both times we used Citizen’s advice and they were brilliant. There was quite a lot of info to gather at the start but they’ve clearly set out the options and I see a massive weight being lifted off my relative’s shoulders.
Your debt solution won’t be the same so it’s worth getting proper advice tailored to your set up. I’d go now so you know what your options are when the house stuff is finalised.

good luck!

Ive never been in debt but join the Martin Lewis website moneysavingexpert forums. They have a Debt Free Wnnabe forum and a forum for Bankruptcy and living with it.

People on that site are very knowledgeable. Don't panic, you will get through it.