WWYD? Fight and struggle to keep your house or go bankcrupt?

[bytheMoonlight]

Quick history: We have roughly £7000 equity in our house, we have debts of about £21,000 and owe a couple of hundred pound on the intrest only mortgage. We are struggling like mad each month to pay the bills and mortgage.

We are with a debt management company that are paying our creditors an equal amount each month and who reckon they can half the debt we owe this was dh's idea and I'm not convinced that this will work.

We hate our house, our area and our neighbours (from hell).

Today we phoned the debt management helpline after DH recieved notice of his first CCJ and it seems our 2 options our:

1. carry on as we are for the 5 years. In five years we will no longer be paying CSA and we should have finished the debt management programme. This means five years of living hand to mouth, stress and arguments about never having no money and our neighbours.
   However we will have a house that we own at the end of the five years, that may or may not be worth what we paid for it in 2007. We will still be paying intrest only though as our bad credit rating will stop us moving off the very high SVR we are on now. So have little chance of paying this mortgage off before we die.

2. DH can declare himself bankcrupt (all the debt is in his name) the offical reciever will more than likely take the house and we will move into private rented accomodation. In 12 months time the debt is written off and we dh can't get no credit for 6 years.
   We will never own a house again.

I am 30 and dh is 33, we have a toddler and I am 27 weeks pregnant.

What would you do?

Would and really appreciate other peoples opinion and point of view

2. for the reasons you've put forward. Not having credit is a good thing when clearly you've found it hard to manage it in the past.

Good luck with whatever you decide.

I would look into what sort of private rented accommodation might be available to you before you decide - maybe ring some local agents and ask on a no names basis if previously bankrupt tenants are welcome or if there are any restrictions on the properties available? Also obviously check out the cost.

I don't know what your employment situation is but sometimes there are jobs with accommodation thrown in e.g. boarding school housemistress, caretaker?

I asked if we would have problems renting when I phoned the debt helpline and she said that some letting agents may want a higher deposit but it shouldn't be an issue.

We both work but accomodation wouldn't be avaliable with our lines of work.

We haven't handled things well I agree. We bought the house thinking we would both be working FT and doing overtime when needed.

Then I fell pregnant (unplanned) just before we moved in and had to go PT and work round dh's hours as we couldn't afford childcare.

Then the credit crunch hit, our fixed deal ended and we had to go onto the SVR rate as no bank would lend to anyone with less than 20% and we only put down 10% when we bought the house and we had lost about £20k when house prices dropped. This increased the mortgage by £200 a month.

Then dh's overtime was cut completly as the recession hit.

Things just snowballed. The outgoings kept increasing and the income was reducing and we lived on credit for about 12 months if not longer without admitting how bad things were.

Then we finally said we couldn't carry on like that no more, sold the car and cut everything down to the bare bone and dh found out about the debt management company.

Now we need to decide how to continue from here.

Gosh, it seems like a big decision to make without professional advice. Could you contact CAB to see if there are any ramifications that you aren't aware of, or any any other possible solution?

Wishing you well, whatever you decide.

We are getting sent through a comprehensive pack but I think a visit to CAB is a really good idea. Will phone tomorrow and book an appointment that we can both attend together

Definitely option 2.

Sorry for your troubles

Definitely option 2.

Bankruptcy and home ownership can be complicated...I spoke to a women whose husband had gone BR and she ended up keeping the house, very odd and complicated but it worked out very well. CAB will know (the volunteer you see may not but they should book you an appointment with a debt expert who will know the ins and outs of BR)

Or...put your post onto this forun and you may get a reply from someone who has done it already.

dh thinks there is a local CAB held locally once a week so he is going to drop in and have a look and this morning and hopefully we can see someone tomorrow.

Going off to look at your link now livingbytheriver, it looks really informative.

As far askeeping the house goes if I was to buy dhs equity stake in the house then we could keep the house I think but that would mean coming up with roughly £3-5k which I would have to try and borrow from some where.
We hadn't really really considered that as an option tbh.

Looking at that link was scary, also went onto the insolvency services website and it all looks so complicated.

Oh no, sorry! They do have loads of information though...it gets less scary the more you find out. One other thing, only take advice from organisations who are offering it for free: CAB, CCCS, CAP, Shelter to name some of the best ones.

There are loads of people out there ready to cash in on your trouble and will offer to help for a fee, avoid them like the plague, the only person you should pay if you have one already is your accountant if DH is self employed.

TBH the worst bit is not knowing what is going to happen, once you know it gets easier to cope with IYSWIM.

Oh I am grateful for the links bytheriver, sorry if it didn't seem like it

I guess makig the desicion is the hardest part, once we've done that we can find out what we need to do next

Are you paying that Debt Management Company at the moment? Do you know whether an IVA is an option for you?

You definitely need to get some free advice, because if you are paying a company to help you pay off your debts, it's actually in their interests to keep you in debt for as long as possible.