Big blackhole of debt & mortgage worries

[rainonme]

Firstly I am a regular wwho has name changed.

Not sure where to start....

DH & I have massive debts (I class it as both of coz we are married although it is mostly in DHs name). We are both self-employed, DH is a company director. When things were going well for the businesses we had a few loans credit cards which got racked up when we moved house & got married. The intention was to pay them all off within 12 months. Then we had DD, and I subsequently got diagnosed with a long term illness just as the 'credit crunch' hit, DH had to take time off to look after me & a young baby & then subsequently had a breakdown. The interest on the credit cards was then pretty much doubled (if not trippled) at this time & the repayments were (and are still are) crippling. (We actually didn't have PPI which in this case could have been handy!!)

We have two mortgages, one for our house & one buy-to-let (which has been empty for about 2 years :(). We always make sure the mortgages are paid so currently have no arrears on either, but the credit card repayments are in default & things are getting pretty nasty. DH lost his biggest contract and his business income dropped massively last Novemeber. DH has spoken to all the companies and explained that basically he is currently unable to draw a wage from his company, (well, not enough to cover everything) and they insist that there is nothing they can do (or are willing to do) to help out. We have offered all sorts of solutions & they simply aren't interested. We asked for a payment holiday from the mortgage so we could get the CCs back on track, but it was declined as they have too many people currently applying.

Yesterday our mortgage company (for our home) informed us that they are getting rid of their interest only mortgages & we will probably end up on full repayment, this will double our mortgage. It couldn't have come at a worse time. Their advice if you can't make the new payments is to consider selling. But our property is now worth less than the mortgage so that wouldn't solve the problem. DD is due to start school locally in a months time so moving back to the BTL property (30+ miles away) would be a disaster & again, because of the negative equity in our house wouldn't solve the problem. My family have been bailing us out for months just so we can afford to eat & pay our mortgage & they can't do that indefinitely (and I wouldn't expect them to).

Due to the nature of DHs work an IVA would cause all sorts of problems & would mean that his income stream (small as it currently is) would stop. Going bankrupt (as suggested by CAB) would not help us either as he would no longer be able to be a company director so again we would lose all our income. I am self-employed also, I work for DH mostly doing his admin. I applied for some part time work when DD was younger but got no where, and although proving it was because of my illness it's impossible (I have to disclose as technically I am classed as disabled) I suspect that it was a factor. We number crunched after the failed attempts at me finding work & actually worked out that after we had paid childcare costs we would be left with about £10 a week which wouldn't cover my petrol cost & we would be worse off so I have just stuck with working for DH & given up looking for work. We live semi rural & jobs locally are really limited & of course everyone wants to work during school hours.

Neither of us are sleeping properly. The stress of it all is making us ill. I just can't see a way out of this. No idea what we are going to do. Everytime there is light at the end of the tunnel it turns out to be an oncoming train! There are improvements in the business, but not enough to help us out yet! Just don't know how much longer we can keep going like this. We could throw the towel in & go & live with my mum, but it's 120miles away & would have massive consequences for all of us. Not even sure what advice I want or what I want anyone to say. Just needed to get it all out, can't tell anyone in RL & at the moment it feels like I'm drowning.

Would it be possible for you to sell your buy-to-let house?

If not, what is the reason for it being empty for so long? Does it need work doing or maybe you need a new agent to get some tenants in and start bringing in some money?

Sorry to hear of your problems....feel free to rant on here as much as you like!

Seems obvious to me
Sell the other house

Why not go bankrupt & husband look for paid work in his field? At least then you can start over again & will have got rid of the millstones round your neck of having two properties in negative equity plus the credit card debt. Your husband can start a new business in years to come.

Are both properties in negative equity? The op only mentions the house they live in being in that situation. Agree though that you need to consider the options of bankruptcy and iva again....they're not ideal but may be the best way forward.

Why aren't you selling the buy to let property?

Sorry, should have said, BTL is in negative equity too. We had tenants in who damaged the property & did a runner. It was privately rented at this time as we had had some pretty bad experiences with the agent it had originally been let through. We cannot afford the repairs needed to make the place rentable again. Hindsight is a marvellous thing!!

DH would not be able to work in his field if he was bankrupt. He would not be able to do what he is doing currently with an IVA. He isn't qualified in any other field so jobs available to him would be limited, plus he doesn't drive!

Have been looking at rental properties locally as we could perhaps rent out our house, although we would still have the same outgoings. There seems to be no housing association type properties in our area. The closest being 12miles away which would be a nightmare. We aren't eligable for help with anything due to being self-employed & DH working more than 16hours a week.

DH has been rumbling on about throwing in the towel, getting the IVA, closing the business & signing on. At least we would be eligable for help with the mortgage then!!

If your husband goes bankrupt he can apply to court to be a director of a limited company. The provision of the Company Directors Disqualification Act re bankrupts acting in the management of a limited company had a giant "without the permission of the court" loophole in it. I've known directors disqualified for misconduct in previous companies be granted permission to act as they would lose all income and the ability to support their families.

Even if he isn't granted permission the bankruptcy would be discharged within 12 months, and you'd all be able to start again. Surely one year of not being able to work in his current field (unless he's able to find PAYE employment or work on a self employed basis) would be worth getting a fresh start and not having to have all these worries.

He's so reluctant to do it. It's not just us that would suffer if the company ceased trading. Extended family are involved too. Ironically his field is finance! It's been the most horrendous 4 years for us. Things just going from bad to worse to awful.

Things are much worse now than when DH had his breakdown & I'm so worried for his health & state of mind. He always puts everyone else first. Staff are always paid & we've been getting what's left, which in May & June was £0!! Something has to give & I have a horrid gut feeling it's going to be the house.

Have said I'd rather go & live with my mum than move back to the BTL, for the sake of DD mostly. We used to live there before we bought our house. Things were good then, pre dreaded 'Credit Crunch', FIL convinced us to keep it as a BTL & it's been a disaster ever since. We moved where we are now as we were getting married and wanted a family but did not want to have children where we were. We never imagined that within 2 years we would move house, get married, have a child, enter the worst economic period the world has ever seen, have me diagnosed with a lifelong and potentially disabling illness & have DH suffer a breakdown!

I am amazed at how much you have had to cope with..I think you need to prioritise your health and find a way to get a better balance as I can't imagine the stress you live with day to day.

i.e Could your dh get a PAYE job in another field and take the IVA or bankruptcy route? I know this may not his preferred option but if the business doesn't improve dramatically then is there another option? Without steady and reasonable income it's not really possible to get a way out of this.

I guess if CAB have recommended IVA/BR then the sums involved are quite significant but is there an option to move to mums for 2 years, DH goes PAYE and you sell the properties/get an agreement with credit card companies and work out a payment plan to pay off the debts.

Can your family pay for the repairs on the BTL property and then they can get part of the proceeds when someone buys it. I dont know how much your BTL is worth but if you get £100k, it should clear some of your debts yes?

Even if you try to sell the BTL, you'll get less than what you paid for, but it may be a sacrifice worth making.

Good luck, Im sorry this has been happening to you, but things will get better. They may change but I hope it works out for you.

Sorry to hear you are having such a difficult time x

Do you want to keep the B2L properties? if you went bankrupt the official receiver or trustee would take the rent you receive, this would mean you couldnt pay the mortgage and then they would be repossessed - any shortfall would fall into the bankruptcy. |

An IVA could help you keep the rental income but this depends on how important they are to you?

Bankruptcy would give you a fresh start, if you decide to keep your home they will value it after 2yrs and 3 month into the bankruptcy and if there is equity then you will be expected to release it. Do you think the property will increase in value in 2yrs?

I never wanted to keep the other property in the first place but I think now we are kinda stuck with it! When we bought our house we got a good deal (or so we thought) as they sellers needed a quick sale. It was valued at £30k more than we paid, but now it's not worth what we paid. Really not sure how it's value could fall that far in 5.5years! But apparently it has. It also needs work doing, which obviously we can't afford. We had such great plans when we moved in & then 'life' got in the way! My family have offered small amounts in the past to fix the BTL, but it needs a whole new kitchen & possible damp treatment. (We aren't sure until the current kitchen is removed.) The council keep sending us information about empty housing schemes but DH doesn't think they'll be able to help due to repairs.

Unfortunately for us, we have a 90% self-cert mortgage on interest only (and the BTL) we are a mortgage company's worst nightmare!! But like I said, when we moved, things were great. The business was going from strength to strength. No one could have forseen that the global economy would crash the way it has.

The sums are alot, although not as bad as some people DH sees through work. And we actually (despite all the crap) finished paying off a bank loan earlier on in the year. 5 years ago we had savings, now we have nothing so no chance of a remortgage or endowment type option the mortgage lender have given. (Not that we could do that anyway being self-employed).

Ultimately I do not want to leave my house. I do not want to uproot my DD just as she is settling into school. I do not want to have to 'start again' with new doctors & consultants. I do not want to move 120miles across the country. BUT I'm not sure there is going to be a solution other than this.

Personally I think DH should take the IVA route & that we should attempt to sell our house & move. The BTL mortgage is about half that of our house mortgage as it currently stands (although bear in mind that the bastards are trying to change that so it is doubled), so it is the cheaper property to keep. That way when things improve we can do the repairs, get tenants & some income from that to help. OR DH should get the IVA/go Bankrupt and see if he can find another job locally. I'm just not sure his Dad or the rest of the family, would forgive him for letting the business go.

The credit cards are hounding us constantly. 20+ phonecalls a day I'd say at a guess. Not sure what they expect to change from one hour to the next perhaps they think the money tree in the garden is suddenly going to sprout & that we can miraculously pay them?!! All those money advice websites etc who say 'talk to them, they can help you' are talking utter bs, they have no interest in helping or making repayment arrangements at all. We have offered them nominal amounts, mostly to show that we are attempting to pay & not just ignoring them, but they 'can't' do that and 'can't' accept anything other than the full payment.

Have you looked at debt management plans they are an alternative to IVAs - not sure if they would be appropriate for your situation. Think they can only help with non-priority debts. The government endorses a few who don't charge a fee AFAIK
good luck - sorry you are going through all this. we are going through a bad patch financially at the moment -and am glad we are still renting as the worry of losing a house must be great.

The credit card companies are not allowed to harass you like that. From thisismoney website:

Under the revised Banking Code published in March last year banks promised to be 'sympathetic and positive' when dealing with struggling customers. Part of this positive approach is to help customers set up a debt management plan, which is what you are being pressured to do.
While banks and credit card companies and the like have the right to ask for their money they must not bully people into paying up.
However, the Financial Ombudsman Service says problems sometimes arise when customers are in denial about their debts and refuse to talk to their banks.
That's when they might receive lots of calls, which can lead to accusations of harassment.
Even if you are in difficulties, you have the right to insist the card company calls you only between certain times on certain days so, for example, you do not have to discuss your finances when work colleagues might be listening.
If you feel you are being treated unreasonably, you can complain to the Financial Ombudsman Service which can order the card company to leave you in peace.

Read more: www.thisismoney.co.uk/money/cardsloans/article-1681345/How-can-I-stop-credit-card-harassment.html#ixzz23d10HL5c

I'm sorry to hear you're struggling, you have obviously been through hell these last few years.

I understand DH's reluctance to look for employment, but that may be the best place to start. Are you currently working / able to work? Presumably if your income is very low (especially now DH's income has dropped) you are claiming all tax credits etc that you're eligible for?

It may be worth speaking to your mortgage lender, explaining how there will be a shortfall if you sold (get an estate agent to do a valuation so you know what sort of figures you're looking at) and see what they suggest.

Personally I found the CCCS to be far more helpful than CAB, so give them a call and see what they can suggest.

I hope you can get something sorted :)

I am currently self-employed as well, I work for DH mostly just doing his admin. We do claim all the tax credits we are eligible for but these have just dropped. We spoke to the estate agent who sold us our house & they gave us a rough idea of the value of the house now. It's an old property, nearly 200 years old, and it really needs some work doing on it, so it's not in A1 condition either right now. (We had planned a new kitchen/bathroom, garden landscaping when we bought it but they went out the window when things went downhill!)

There is no where locally (other than small retail jobs) for DH to find employment. He would have to travel & he doesn't drive. He has considered getting some additional part-time work, but he is so exhausted I'm worried that this could push him over the edge. I am currently able to work, but we have the issue of childcare costs if I do. Plus the nature of my illness means my ability to work could change suddenly with no warning which is what we think has put off employers in the past (even though proving this is impossible).

Will point DH in the direction of the CCCS. Thank you.

What area of finance is it he currently works in? Is it something which would transfer to retail banking eg IFA? In my experience they are more flexible than you would expect with staff who have financial difficulties, although not sure about if you went for the full bankruptcy.

Could you look into a weekend job, just to get a small amount extra coming in? Or theatres, sports stadiums etc will often keep people on casual contracts, just working occasionally when needed, this could be useful for you as you wouldn't be committed to working if you weren't well enough.

No theatres or stadiums around here!! Shall have a look around, but haven't seen anything locally lately. Even the big local supermarkets haven't had anything suitable in the last few months. Maybe stuff might come up closer to Xmas.

It's quite complicated to explain what DH does & it's something that could be google-able so I don't really want to say exactly but he isn't an IFA. (Sorry to be criptic)

Not a problem, I suppose the best way I can suggest then is to lo

Ooops, posted by accident!!

Look at his qualifications and see if these will translate to employment elsewhere, if he has CIFAS or CEMAP qualifications for example there is lots of choice for him with a salary rather than the uncertainty of self employment.

Pretty much all supermarkets and shops take on temps at Christmas, usually with a view to keeping some on permanently but I think these staff are usually taken on around September / October at the latest so definitely keep an eye out and maybe proactively offer your CV in at a few places.

Hello rainonme. Your OP has sent a very unpleasant chill down my spine and brought back some nasty memories from 18 months ago when both DH and I lost out (well paying) jobs within months of each other (and shortly after relocating).

I don't think I'll ever get over that God-awful feeling when we stuck everything into Excel and realised that column A and column B just wasn't going to tally

Thankfully in our case things did work out for us before we reached the bottom of our savings (although DH did have to take a job working away during the week which, although not permanent, has been a hard sacrifice to make), but oh how I feel for you.

When I was convinced things were not going to get better I contacted a debt charity who, amongst other things, we're able to take over negotiations with creditors for you should you no long be able to make payments. They posted a large info pack to us with their services which I have kept and I will have a look through it tonight in case there is anything that can help you.

I hope things get better for you.

Euurrrghh! It gets worse, we knew our tax credits were going down, aren't everyones?! But DHs are going down to £18 a month! Oh, and we owe them money! The letters came today. Just don't know how you can earn significantly less & have them slashed by that much! Mine have been cut by just over £65 a month.

Sick of it! Just need a break. Seriously considering just packing up & starting again.

neverquitesure - Which debt charity was it you contacted? Any info you have would be gratefully received. :)

Right, children not quite all in bed but have dug out the info pack they sent us. It was National Debtline and their number is 0808 808 4000 and website www.nationaldebtline.co.uk. The helpline was fantastic and the information pack was pretty comprehensive.

One of the 'fact sheets' ("fact sheet no. 29") in the pack is about Debt Management Plans. You may be able to find it if you google it? According to the intro they contact all your creditors and arrange one affordable monthly payment for all of them. The creditors then deal with them instead of you (so no more 20+ calls per day )

I'd be happy to go through all the fact sheets later for you and pick out any relevant number if they are not available online.

Give them a call though. They were hugely reassuring when we spoke to them.