Overpay secured loan or husband’s secret defaulted credit card debt first?

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Hi all,

Looking for some financial advice about which debt to tackle as a priority…

Backstory: husband and I have our mortgage (about £180k remaining). Two years ago we took on a secured loan to consolidate credit card debt we both had. We took on a loan for £47k at a much better rate than the credit cards. The last 2 years we’ve worked hard and cleared £10k. We each kept a credit card for emergencies only and it’s come to light that my husband has been using his card regularly and accumulated £8.5k of debt. To make matters worse he stopped making payments and the account defaulted. It is now in the hands of a debt collection company.

We are fixed in our mortgage rate for another 3 years and the secured loan is about the same. We intend to overpay the debt and get rid of it as quickly as we can. My question is which debt do we prioritise?

The secured loan has interest but the amount left is £37k, the debt with the collection company does not have interest but is much smaller at £8.5k.

Trying to put my own feelings aside here and be pragmatic (obviously I’m extremely livid and hurt that effectively the debt I thought we had cleared has been wiped out by his financial mismanagement).

I do not intend on using any of my own money to help overpay the £8.5k out of principal (I’ve just started maternity leave and was also on maternity leave 2 years ago). I’m leaning toward husband paying the minimum amount required to the collection agency whilst both of us also overpay the secured loan. I’m just not sure if this is the best way to go or if my own feelings on the situation are clouding my judgment.

Appreciate any advice you might have!

Firstly, someone will come along and tell you that the 8.5k is also your debt because you're married - this is not true.

I think you're reasonable to say he pays it back himself, financial infidelity is hard to get over. Make sure all the credit cards are closed now so neither of you have access to them.

In terms of damage to credit file/future lending, that's done now so long as the account has been defaulted officially. Check his credit file. Once that's happened it's kind of done and you can start to move on, so in 3 yrs it might not be so much of an issue when you remortgage. No point paying it off faster, just make the payments regularly which helps demonstrate some kind of good debt hygiene.

Secured loans to repay unsecured debt are madness, it's done now but pay that down as soon as you can. If any issues arise and you can't pay it you'll find those kind of "second charge" lenders are really aggressive about getting their money back (more than a mortgage lender), which might make you homeless.

Consolidation loans rarely work as a means of stopping debt - you and your husband need to have a conversation about what the root of the spending has been and make an agreement of how to go forward.

Thanks @shuffleofftobuffalo I really appreciate you responding. I did go into this blind and in hindsight it has been a mistake but like you say, it’s done now. We’ll focus on the secured loan and get that cleared as fast as possible.

It is the financial infidelity that’s upsetting me the most - I had no idea and only found out by pure chance. Tbh, husband and I have other issues to deal with (emotional abuse/gaslighting). This is just another nail in the coffin for me and I guess I’m just trying to figure out how to protect myself and kids as much as possible right now (financially).

I did try to get to the bottom of the spending and why the debt occurred, but it’s fruitless.