ExPat your situation sounds awful hun x
I used to work for a housing association, there are so many sad stories I could tell you.
For your housing situation currently is it HA or council? If its HA your HA should have a social investment team/and an anti-social behaviour team. Also the councils environmental/department of health, you have to make lots of noise and complain a crap load to everyone and anyone, Local MP can be a help as well...sometimes depends on how feckless they are! but with the election getting closer, now would be a really good time to speak to your local MP and lobby them for safer/better housing.
It can take a long time to get a result and you have to keep trying! As for moving schools etc... you can always ask the council/Ha if you move because of dire housing situation can they fund transport to current school (this has been done in the past if the moving of school is classed as deteramental to the child) this is usually a private taxi in my experience.
Also speak to HV for them to write you a supporting letter about the state of the estate/area you live in and suitability of it. if you can stand it and don't feel then it might be worth speaking to the school as well.
What year of school is your DC in? if you can hold out till the age is moving a different school e.g. infant to junior, or junior to senior that might be the best time to make the move (if you don't go insane by then).
Also is there more than one HA in your area? assuming you are HA if so contact them. The other people that you could try is the Housing Association themselves they regulate/manage the HA's overall they have a complaints system probably won't help you buy always worth a shot. Ohhh and if you can get a letter to the MD or the HA about your housing situation, mark for addressee only, ideally with evidence/photos etc.. this can be a really effective method as well!
You always come across as really helpful in posts I hope some of the above helps you.
OP - I think you did come across a bit aggressive and defensive when people were trying to help you.
Sadly you will be put in temp accomodation, your situation is sad, but you must be able to rent somewhere even if it is smaller, and you have to move out of the area and DP has to commute further, you have a car so in theory that won't be such an issue you sound like your in a better position than lots of other people.
Bankruptcy is a desperate situation to be in, and will definately go against you but there are private landlords loads that don't like to advertise in the normal ways....try places like netmums, here, gumtree etc... you'll be surprised what you can find, your local paper's online advertisement pages to get in as the ads go live before the printed paper is another source.
You've had 5months, that is a lot of time to have got sorted, I appreciate that you felt the council were going to re-house you but this would never be done immediately if you have received bad advise from your council/ha I would follow up with a complaint when you get sorted.
Contact your local HA and see if they have any housing coming up, they will take people with bad credit if you have proof of paying rent etc...
You need to take responsibility for your family you choose to have them and have to make the relevant sacarafices to get by like we all do, whilst redundancy is sad it has happened to loads of people, can you work nights in Sainsburys or something while DH has children, then when he works they are at school etc...you sleep care for DC? Its difficult but I know thats what DH and me would do in your situation we're both currently at risk from redundancy, and whilst we would get a small payout initially we would have to use that to re-train/get by whilst looking for another job!
Sorry if that sounds harsh, but I grew up on a council estate and it wasn't pleasant no where near as bad as what Ex-Pat has to put up with but I have seen the estates like that having worked in Brixton, Peckham etc... for a HA and its not somewhere you would wish children to grow up.
Hostal accomodation is grim but that and or a bedsit is most likely what you will be offered if you don't find something yourselves. I know you feel desperate at the moment but the only way is to do something constructive about it and stop feeling you'd be better off on benefits because trust me you wouldn't its a grim way of life. Good luck.