We have just found out that Dh is likely to be made redundant, we have a big mortgage and CC debts and i only work part time and we do not have ppi...

[josben]

My mind boggles at what we would do if he does get made redundant - out mortgage is £144,000 - he will get £23,000 redundancy,but we have £19,000 credit card debt and I am only working part time earning £6,000 approx., If we sold out house we would have roughly £20,000 equity - what should we do...? Should we sell right now - to avoid a repossesion situation - we could move in with my mum - we have 3 DC's so would be a squash...? Help

So for rambling...

Hugs

First of all i would say dont do anything straight away as a knee jerk.

Firstly wait till ur sure he will be made redundant.

Can u move the credit card debit to interest free cards? We got a 9 month interest free one recently from the Halifax.

In terms of living with your mum is- how big is her house, how close to work/schools, how well do you get on?

It might be possible to change ur mortgage to interst only???

Why are you assuming he wouldn't find another job reasonably quickly?

There is help available - you have the right to defer all or part of your mortgage interest payments for up to two years if you have had significant loss of income and you have less than £16K worth of savings. It is financed by the govt, talk to your lender.

How much money do you need each month to pay all your outgoings? Including servicing your debts and mortgage? Once you know that, you can work out how many months his redundancy pay is likley to last, and gives you an idea of how much of a breathing space you will have.

Don't assume the worst just yet. DH was in the same position earlier this year, but the axe just missed him (for the time being at least).

also find out what benefits you can claim. Speak to CAB. There is help available for mortgage payments, not sure if redundancy pay is taken into account for this.

1. look at child tax credits/ working tax credits - you may find they top up your income to a manageable amount. They have in our case, and our mortgage is comparable in size to yours..
2. they will penalise you benefits-wise for holding money over a certain amount in savings, so work out which debts you want to pay off out of the redundancy money (which are costing you most)- try and hold as much rainy day money as possible though. I would definitely avoid spending redundancy on living expenses though - then you get neither your debt paid off, nor a comfort zone.
3. don't panic!
4. don't worry about the total amount of your mortgage - worry about the monthly payment. Make this your priority.

I think you just need to take a deep breath, plan for it, but still hope for the best.

It hasn't happened yet, but you may find you can still manage after it does. And, of course, your DH could still get another job, couldn't he?

josben - I am seeing a lot of this in the voluntary job I do. You have a breathing space and need to use it wisely.

Get yourself to Citizens Advice Bureau or ring straight away on Monday. Make an appointment. It may take 6 weeks to get to see an advisor.

Their advice is free, up to date and comprehensive. Do not apply to anyone else for debt advice, or debt management programmes, as they will only be interested in fees. Find out what benfits you/DH can get ASAP and what action to take on your debts from CAB.

Set up a new bank account, at the Post office if necessary for your wages, child benefit and any other money you have coming in. Keep that essential cash away from your main bank account so you have something to to live on to pay for food and essentials.

Ask CAB about how to reschedule your mortgage and how to deal with your CC debt. Ask CAB to negotiate on your behalf as your creditors will take them much more seriously than if you contact them. Consider paying off your credit card with DH's redundancy and then rip it up and do not use it as the interest on a credit card will drag you down. Consider selling your house, consider going bankrupt. Do not do anything though without CAB advice.

Try to get any job at all for you or DH or you that is full time. Do not wait for redundancy. Be very proactive and make sure you take the lead if DH is too shell shocked.

Banks are still quite unwilling to repossess and there is a lot of help for people with mortgages. Unsecured creditors though will send in baliffs and go for CCJs or ask for court orders to attach unsecured debt to your property much more quickly in my experience. However, creditors will negotiate with CAB as they know it is serious.

My experience is that people typically ignore the problem and try to hang on to their house in situations like this but the equity in your house soon dribbles away. I have rented for 25 years and really nice flats and houses for far less than a mortgage. Renting may be a far better solution for you until DH can get a job.

Above all, stay away from doorstep lenders.

BeenBeta: "My experience is that people typically ignore the problem and try to hang on to their house in situations like this but the equity in your house soon dribbles away."

Can you elaborate. Is it because the unserviced interest payments build up and eat away at the equity? It just seems a shame to sell up when the OP's dh might get a job soon (who knows, it is hard to say).

How about the OP renting out a room in the house to lodgers (if feasible).

My experience is that people typically ignore the problem and try to hang on to their house in situations like this but the equity in your house soon dribbles away

Dh has been unemployed one year...the mortgage is still paid out of my (paltry, P/T) wages/ CTC/WTC/CHB! - if we had sold it would impossible to keep the equity in a bank account (As we'd be expected to spend over a certain amount on living) and we would be buggered once he got a job and unable to re-buy then. and we'd still have to pay for somewhere to live (likely more expensive and not as nice)

the OP will have enough redundancy to cover the unsecured debt - even when penalty charges for early repayment (if there are any) are applied. so long as income from the available sources (contributions based JSA, CTC/WTC, CHB, with a little help from council tax relief...) is sufficient to cover mortgage & basic living expenses, there's no reason not to hold out indefinitely....

The difficult thing is accurately assessing in advance whether the monthly income will be enough to do this, even with all the budget trimming you can manage. Once you have all the claims sorted it becomes clearer (though i think WTC/CTC came back fast, as did JSA, council tax relief is claimed via local council and takes longer...)

blueshoes - my experience of this is based on people who have typically have slowly descended into unmanageable debt after job loss. What typically happens is they live off credit cards and overdraft at first. Then they run out of credit and start missing paymets on loans, credit cards, utility bills etc. Then they start missing payments on direct debits and start getting hit by bank charges. Sometimes £40 per unpaid debit.

Then they start to get into a situation where the bank starts writing letters, court actions are taken against them, baliffs arrive. All these start wracking up fees. Then they get into debt management plans with management fees. All the time the interest on existing loans plus charges is rising. Finally, they to high interest lenders charging 200 - 350% per annum. At that level of of interest the original sum cannot be paid back.

In the end their house is repossessed whih brings in yet more charges.

I would not advise josben to make a panic sale the minute DH loses his job. Certainly she/DH shoudl take some time with CAB advice to look at all the options. My main message is do not rule out selling the house.

Capturing the equity through a sale and using that to pay down credit card debt and using DH's redundancy to live off in a rented house or with parents might be the best route to avoiding it being eaten up by interest and charges. It may well be the best route to avoidng bankruptcy too.

Always bear in mind that equity in a house is really just another form of last ditch rainy day money in a crisis. It is a real shame to see people waste that paying interest and charges.

I wouldpay off the cc and scrap them.Put the 4 k left away for emergencies while he looks for work.Switch to IO if you can and then seriously cut back while he seeks work.Sell any unneccesary bits and pieces and scrap things like sky tv gym ballet lessons etc.Eventually the Govt pay the interesr on the mortgage which will give you breathing space.if dp is home maybe you can work more and check entitledto.com and find out exactly where you are Good luck x

Even if your DH doesn't lose his job you are obviously living beyond your means now or have been until recently, so this may end up being a good warning call if he escapes redundancy.

Set up a spread sheet with your income and outgoings including total debt in each area and how your are paying it down.

Get a small notebook each and write down everything you spend your money on for a month. Then review your spending. You either need to make cuts, earn more or (probably) both.

Don't know what your husband's salary is but to have unsecured debt that almost equals the equity in your home is not good.

If it were me I would be cutting all but essential spending straight away. You can turn this round and keep your home, but don't bury your head in the sand.

I have had similar experience. My dh has been made redundant twice in the last 15 years. Last time we were lucky as he obtained a new job before his last day at work and we saved the redundancy money.

I am a debt counsellor and speak to people in your situation every day. If you are struggling with your current level of debt you could call the Consumer Credit Counselling Service (cccs, 0800 138 1111, www.cccs.co.uk) They can advise you on all aspects of your finances and let you know of any benefits you are entitled to. They are also a debt management comp, but they do not charge any fees and will negotiate repayments with your creditors. They have a shorter waiting list then cab and (in a professional opinion) I find them better than cab.

I think you are over reacting. My husband was made redunant last April and his redunancy package was no where near as generous.

Your husband will have 18 weeks of contributions based income support as well as his redunancy money. In the event of redunancy then paying off the credit card and cutting up is a good idea.

You need to learn to live within your means. This means taking a serious look at your expeniture and deciding what are needs and what are wants.

146K is not that big a mortgage and you do need somewhere to live. I doult you would be able to rent any cheaper.