Impending debt. What do we prioritise?

[TangoTangoMango]

We are downsizing due to redundancy/cost of living, to reduce costs and free up some equity, but we will need to go into debt in the meantime. We aren't eligible for benefits as we have assets, and temp roles will barely make a dent in our outgoings (which we are reducing as much as we can), so debt is unavoidable.

What can we do to minimise debt/cost and damage to credit ratings? Is there a loan we can take out secured against the house sale? Otherwise which bills do we prioritise? Can we make arrangements with providers ahead of going into debt? When does it start to impact credit scores? We have already moved to interest only on the mortgage.

What are your plans once the house is sold? Go into rented, buy outright or take out another lower mortgage?

'We aren't eligible for benefits as we have assets',
Can you sell some assets to release funds and avoid going into further debt?

We will buy outright somewhere cheap enough to also free up some cash or perhaps get a small mortgage (if that's possible with a new job)

The only assets are the house and the car (which is worth peanuts). We are fortunate to have a large amount of equity in the house.

I have always heard you should prioritise food and essential travel, then mortgage and council tax, then utilities. Credit cards and unsecured loans are lowest priority. Contact them all first to let them know what the situation is and they have to work with you to minimise impact. Credit cards should be able to freeze interest payments (but obviously you have to stop using them).

We've not used credit cards yet so no interest to pay. I didn't know if there was a cheaper/better option rather than build up credit card debt.

Your house and car won’t make you ineligible for benefits, only the housing element (which is for renters)

If your only assets are a car and house you should be eligible for benefits. Have you used one of the online calculators? I believe it's only savings, stocks and shares that will disqualify you.

Agree with this. I thought it was if you had over £16,000 in savings that stopped you claiming benefits.

Try this benefit calculator www.entitledto.co.uk

I would also ring around everyone before not paying and just see if they do anything for those going through hardship. In particular for things like council tax I have heard they may allow afew months breathing space.

I'm sorry this has happened to you OP and I hope your circumstances improve very soon.

If you don't have credit card or other debt - can you give an idea of which outgoings are likely to cause you difficulties?
If you have no savings and assets then you might well be eligible for some top up benefits even if you are in temporary work; and also look at Council Tax discounts.

Firstly I would open an additional basic bank account so you always have back-up banking facilities. Then open a savings account not connected to your main accounts to keep any redundancy payments and an emergency fund.

Write out a bare bones budget of essential monthly payments - food of basic simple meals, mortgage and house insurance, Council tax, utilities, petrol, essential medication. These are your priorities. Contact all providers to let them know your difficulties and ask for payments to be reduced or suspended. If you have mobile phone contracts ask to switch to a SIM only. Cancel as many non-essentials as you can.

After this, focus on trying to build up a small emergency fund in case of urgent repairs that can't wait such as the car, or boiler.
Try and sell as much as possible that is no longer required - clothing, furniture, unwanted jewellery, old mobile phones.

Are the bills in both of your names?
It sounds unlikely but - do you have any income protection insurance you might have forgotten about? Could you rent out a room or driveway?

Stepchange has lots of useful info. You could also try making an appointment with Citizens Advice.
https://www.stepchange.org/debt-info/dealing-with-debt-problems/what-debts-to-pay-first.aspx

How soon will you sell the house (hopefully?) i.e. is it on the market already or putting on in the next month etc? Is it priced competitively to sell?

If you currently have no credit card debt I’d get a 0% on spending card and look for the longest deal possible on that - moneysavingexpert is good on this and will let you check the chances of being accepted. Put food/fuel etc on that. Pay only the minimum each month. Then that frees cash flow for priority payments like council tax and other bills. I’d avoid a secured loan if you can get sufficient credit on 0% terms that will tide you over until the house is sold. If you can’t get a new card at 0% (you could each apply to different companies?) then use your existing cards and pay the minimum + accruing interest if you can afford to do the debt isn’t accruing interest upon interest every month.

Make a really good budget. Then reduce things like energy direct debits to the lowest allowable, or call them and armed with your budget explain the situation (house on market etc). They have a statutory duty to consider your circumstances.

The quicker you can sell the better, obviously.

How much is the defecit likely to be? Can a decent limit 0% credit card ride you over?

If not I'd take a loan for the most you can get now while your credit score is decent and use it as a buffer, say £15k.

Get full amount, pop it in easy access saver, Santander has one that pays £2% monthly so you can at least mitigate loss in interest, with draw just enough monthly for loan repayments and outgoings. Settle up asap when you sell
House

Thank you for all the suggestions. Not sure I'd qualify for a loan or credit card now, I'm already unemployed.
I'll look into the other suggestions too.
I really didn't think it would be so difficult to find a comparable or even more junior job. It's totally thrown me.