bad financial situation, sell house?

[blackmonday]

I love my home so much but we are in a real financial mess. We are over £35k in debt. We have most of our debt with payplan on a dmp but still owe about £3k on top of that. dh is self employed and not bringing in enough. We have no access to any credit so are getting to the stage where we are down to our last penny and household bills are not getting paid. We have never missed a payment on our mortgage and in todays market probably have about £35k equity in our property. I know most of our creditors would take offers on what we owe and we could probably clear all our debt for about £20k. But then the kids would lose their home, we would never get a mortgage in the future and would have to rent for a long long time if not forever. We are approaching 40 so not that young anymore. Would you sell and go into rented to clear the debt or would you hang on hoping things improve?? I am looking round for things to sell on ebay at the moment to pay my gas and electric dd. that's how bad things have got

You are talking crap. I was diagnosed with kidney failure and told by the DSS to sell my first house as they couldn't help me for 3 months before my transplant.It was then that I first made money as I am an interior designer and I had no intention of renovating .I sold up and moved to small flat for years which I renovated and sold.If I had been given benefits I would have continued as a designer and stayed in my first lovely home.So get your facts straight before you open your mouth

What the hell has that got to do with the fact that on numerous threads you've disclosed that you're basically a property developer ?

Because I became one by bloody accident!I approached the social as I couldn't cope and dp wanted to quit work to nurse me and they said sell up so we did Because of that I realised I could make money combining my jon=b as a designer with property.Sod off and mind your own business

So what if it's by accident you've still made money out of the inflation of house prices and so your advice to the op has an agenda and not necessarily in the OP's best interests, just thought I'd disclose that as you weren't forthcoming.

You really are bitter keep hanging on by your finger nails very clever.I haven't developed a house in years you are way behind dear.If house prices correct it would have no effect on me and how I decide to earn a living is none of your business but is no secret I am a designer not a developer as such

I have never done that My design is property specific and has always been based on a particular style.I have not waited for anyones house I have lived in every house I've done and have never known whether what i did would sell or not.But you do sound bitter not my fault you made bad choices (Hides thread)

MillyMoo, it doesn't work that way. If you make yourself voluntarily unemployed you can't get housing benefit to step in and pay.

Can you go bankrupt and still keep your house?

I'd do that before selling up and renting.

You're going ot have to go to work more. Evenings, weekends, etc.

I wouldn't make such a big decision without seeing CAB first. Even if the house went on the market today it might not sell or it could take months. There must be some way, in the meantime, of reigning some of the debt in or at least stop it escalating.

MillyMolly - do you rent or are you a home owner?

I do rent and have for decades because I and my DW feel it is cheaper to rent and am happy to tell people why I feel it is cheaper. I am not happy that people will lose their and am not happy that young people cannot buy a home.

What I said to the OP is based on my experience working as a voluteer with an organisation that helps people in the position the OP finds herself in. Very serious debt problems are affecting people and it is a horribly stressful way to live. I also know what creditors will do get their money out of people.

It genunley

I have only just caught up with this thread. Thanks for all the advice. I'm still not clear on the way ahead. I'm now on a debt management plan so will not get credit from anywhere or another mortgage. So selling up and downsizing is not an answer. Our mortgage at the moment is less than rent would be, but that is only because we are on a really good tracker. As soon as rates go up that will be a real problem for us. With our dmp at the rate it's on we will not be clear of this debt for about another 25 years. I thought bankruptcy meant you had to sell your home?? is there any way of going bankrupt and keeping our property?? My ideal situation would be to stay in our home if at all possible.

I think you can keep the house if there is no equity in it.If you have equity you have to pay that to the bank and then they issue a DOCUMENT SAYING they have no further interest in your property.

The courts order the sale/liquidation f your assets n a bankruptcy to pay your creditors. At the end of the bankruptcy proces you are discharged providing you comply with the terms of the bankruptcy order but you are left with no debt and no assets except a few personal possessions and things you need to work which are called 'tools of trade'.

I do think you need to go to CAB and consider all the options. By the way, if you are paying a firm to run your debt managment plan you may be able to get out of paying the fees by going to CAB. They do free debt management planning and can get you out of your existing debt managment plan contract.

abetadad does that still apply if there is no equity in the house?

noddy - I think you have a right to buy the house back at the valuation price put on it by the bank or buy it at the auction. Not sure you just have a right to keep it if there is no equity.

If there is no equity, you have a right to continue the mortgage as long as the Mortgage Company agree.

If there is equity, you will be required to find someone who will buy back the 'beneficial interest' (equity) from the official receiver. This can be negotiated, but if you have £35k equity, they will want a good chunk (25K +, I should imagine).

If you don't do this, and the house is repossessed, one of three things happens:

1. The house is sold, makes a profit, and the profit goes to the official receiver towards your BR debts (in it's entirety, even if that profit exceeds your debts - you are still BR despite having raised enough funds to clear your BR debts.)

1. The house is sold, raises enough to clear the mortgage, and you walk away.

1. The house is sold, the sale falls short of the mortgage amount, and the remaining debt is converted to an unsecured debt and included in your BR.

To be honest, I can't see a judge granting BR if you have assets that would clear your debts.

Op - I have no hidden agenda although some of the comments on this thread are pretty daft. Unless people live near you the effect of your home going on the market on house prices is pretty irrelevant!

What will you do if, god forbid the house needs repairs and you have no credit? You have to take a difficult decision where all the choices are bad, So you need to decide which bad choice you can most easily live with. I would probably put the children in a shared bedroom and take in a lodger because it gives quick cash. Or I/ my OH would take bar work/cleaning or something to stay in the house. If you can't face those choices then sell the house, rent, pay off your debts and start again later.

I have indirect experience of companies applying to the courts to secure what where unsecured loans on your property. I agree that this will mean inflated court costs and a much bigger debt.

One last thing - the longer you delay a decision the worse it gets. You need to make that choice now.

blackmonday - it is worth spendig a few hours reading around the money management section of the CAB website to think about your options.

I agree with lou that there is little chance a judge will allow you to walk away from your debts and retain your house if there is equity enough to clear the debt. I also strongly agree with tatt that the longer you delay the worse it will get.

As I said before £35k in todays money might seem a lot but in 10 years it will be laughable so it's not worth loosing your house for, which you may well be renting off the bank but the fact is the bank doesn't want to do 6 monthly inspections, charge you every time you move for administration and credit checks. If you can't pass a credit check you are going to end up with the shite houses in areas nobody else wants.
You can go bankrupt and stay living in the house, you need some good advice on how to do that, through the CAB or a solicitor. Whether it is worth ruling out ever being able to work for certain organizations etc for £35k is another matter, it really isn't a lot of money.

If you are scratching around for things to sell in order to pay your utilities, I am afraid the time has come to sell your house.

I'm sorry, it must be awful.

A friend who was in the same situation told me that once she'd done it, the relief was tremendous. Things will get better, but I don't see the point in hanging on to the bitter end.

Personally I think the UK economy has a long way down yet to go, and I would get out before negative equity became a serious problem, but that's purely my hunch.

Does your council have a scheme like this ?
www.thestar.co.uk/headlines/Struggling-homeowners-offered-council-loans.6172459.jp

Might be worth exploring.

The answer is so clear - your DMP needs reviewing immediately as the figures MUST be wrong if you still can't afford to pay your bills. An IVA will loose you your house in year 4 so a new or reviewed dmp is the only answer, but payplan are not the best for the personal touch that you require.I could help here.