Author Topic: Lots of Debt Questions need help  (Read 3085 times)

charlesdoc

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Lots of Debt Questions need help
« on: Mar 19, 2011, 02:22:51 PM »
Hi all
I would be thankful for any advice on the following
 
I live with my partner and have lots of debt 15k also I need to move house but I'm in negative equity to the tune of 30k.
The mortgage is in my name but some other debts in joint names and seperate names.
 
Any ideas on a way foward?
 
I was wondering if I should rent a place out where I need to live give up the house back to the bank, apply to payplan or likewise taking all debts under my name leaving my partners income untouched ? is this possible?

Debt Support Trust

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Re: Lots of Debt Questions need help
« Reply #1 on: Mar 21, 2011, 11:06:19 AM »
Hi charlesdoc,
 
It is best first of all to speak to your Mortgage Company about the house.
 
Regarding the joint debt you both will be liable for it, so if you go into a debt solution they will contact your partner for them to pay it
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shocksoc335

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Re: Lots of Debt Questions need help
« Reply #2 on: Mar 22, 2011, 05:14:44 AM »
Never a good idea to hand the key back on the house especially in such economic uncertainty, you will be charged each mortgage payment up to the date of sale, charges, solicitors fees etc and the property will probably be sold under value?

Yes if you have any joint debts you are both jointly and severely liable for them, meaning if the lender wants to pursue you both for the full value they can!

You do have options though you could take control of the sale to reduce the shortfall? The shortfall then becomes a non priority debt like your credit cards loans etc?

You might though find it difficult to rent if your credit reference file is already affected so may require a large deposit?

You could consider an IVA whereby you submit a proposal through an insolvency practitioner to repay the debt usually over 5 years, as you have a shortfall unlikely you will be asked to release any equity at the 4 year period  but be careful if you don't meet your repayments the IP can petition for your banky?

Bankruptcy is an option to include the shortfall and all of your debts?

A DMP but only through a non fee charging company such as National Debtline, CCCS or Payplan?

You could self negotiate with the creditors?

But first you have to complete an income and expenditure form and take some free impartial advice from an organisation who will go through all of your options so you are fully informed before you take your next step?

Shocksoc335







 
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James Falla

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Re: Lots of Debt Questions need help
« Reply #3 on: Mar 22, 2011, 11:03:36 AM »
Hello Charlesdoc
 
How urgent is it that you move house? As has already been suggested, trying to sell the property yourself would be the best option to minimise the shortfall. But in this climate that could take months and you may not be able to wait that long.
 
If you cannot wait there is the option to hand back the keys. If your mortgage and other payments are currently up to date meaning your credit rating is currently OK, I do not believe you would have an issue moving into rented accommodation. I have worked with many people who have done this with no issue.
 
Of course, handing back the keys would generate a higher mortgage shortfall which you would remain liable for. Ultimately however, whether this bothers you or not will depend on your attitude to debt and how you want to deal with it. You could then consider carrying out an IVA or bankruptcy to resolve your debt problem. However you would have to remember that your partner will remain 100% liable for any debt in joint names.
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reduceyourdebtUK

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Re: Lots of Debt Questions need help
« Reply #4 on: Mar 23, 2011, 12:25:46 AM »
Hi,
 
Have you considered making your other debit affordable so you are able to pay the mortgage and save your house?
Is alot of you debit secured or unsecured?
 
Gavin McNeil
debit advice scotland

James Falla

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Re: Lots of Debt Questions need help
« Reply #5 on: Mar 23, 2011, 12:53:12 PM »
I think the main issue reduceyourdebt is that charlesdoc needs to move. As such he needs to sell the house or allow it to be repossessed as it is not likely that prices are going to rise any time soon to resovle the negative equity problem. The question is then how to deal with the shortfall....
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andytheplumber

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Re: Lots of Debt Questions need help
« Reply #6 on: Apr 06, 2011, 05:50:23 AM »
You seem to have two separate issues here. I don't know if your debt repayments are a problem for you or not but the debts don't seem to be the same issue as the negative equity. You probably need to accept that you're stuck with house until the market picks up. Either stay there or look into letting it. If you look at house price increases over the last 25 years you'll see they've always ended up increasing even if it doesn't look like that at the moment. So hanging onto your house is pretty much always beneficial in the long run. The other things to consider are that, if you hand back the keys, you still owe the mortgage lender the shortfall. There will be costs, missed payments and the shortfall to make up. The house will probably be sold a lot below market value so you'll end up in a lot more debt.


If repaying your unsecured loans is a problem, look into ways of reducing monthly payments. In my opinion the creditors are unlikely to hassle you too much as you have no equity in your house or other possessions. so you might be able to get them to accept reduced payments and to freeze interest on the debts until such time as you are back on your feet.


This will damage your credit rating but it's much better than walking away from your house.

James Falla

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Re: Lots of Debt Questions need help
« Reply #7 on: Apr 06, 2011, 11:33:32 AM »
I agree with you in terms of the house being a long term investment Andy. Ultimately if it is possible for charlesdoc to hold on to it, that would always be the best bet. If a move is urgent, then renting it out could be a good idea. However you have always then got the worry if you can not find a tenant or that a tenant moves out suddenly leaving you with the mortgage payments once again. I know a couple of people who have chosen to simply give their homes up rather than try to rent them as this was just to difficult. I guess it depends on the state of the rental market in the local area.
 
In terms of the unsecured debts, I am not sure it is right to say that if they are not paid the creditors will not hassle. In my experiance they will hassle a lot until at least a debt management plan can be agreed. Even then and even with the house in negative equity, they could still ultimately push for a charging order.
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andytheplumber

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Re: Lots of Debt Questions need help
« Reply #8 on: Apr 07, 2011, 12:02:56 AM »
you are wrong james. I've dealt with this for 4 years. Mostly my partners debts and now got it all totally under control. walking away from your house is stupid. unless you really need , for phycological reasons, to get  away from it all. The reality is that relatively small unsecured creditors don't pursue you. And larger ones expect payments but are happy to take reduced payments and suspend interest. People are terrified of this but mostly they have very little reason to be. Leaving your house is totally different. It innexorably leads to re possession and a massive debt. and to muddle the two is a big error. yes, it will mess up peoples credit rating but that just means they won't be able to make these mistakes again for six years. So what? this is not a tragedy compared with having your house repossessed. do people know that it leads to your house sitting empty with a for sale outside until ultimately its sold cheap at auction? and that they then owe all the difference? 

shocksoc335

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Re: Lots of Debt Questions need help
« Reply #9 on: Apr 07, 2011, 09:42:11 AM »
I would say James is right but then so is Andy. Ultimately though the choice is charlesdocs and as long as she is informed fully its her decision to make!

The economy is not going to pick up very soon and even if we have a bust and boom its unlikely she will regain her negative equity over the next few years. By which time if she has petitioned for her bankruptcy the stress and pressure related to her debt situation has gone and she can start to rebuild her life. That's my view anyway!   
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James Falla

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Re: Lots of Debt Questions need help
« Reply #10 on: Apr 08, 2011, 03:18:20 PM »
Hi Andy
 
I understand that in your case you have managed to get arrangements with your creditors and they have been good about it which is great news and the way it should be. However, I have been working with hundreds (if not 1000s) of people with debt problems for the past 12 years and I assure you that it does not always happen like that. I speak to many many people each month who are being constantly hounded by their creditors who are continuing to add interest despite them sticking to reduced payment arrangements.
 
In terms of charlesdoc's property I do agree that holding on to a house for the long term is the right thing if you can do it. However in Charlesdoc's post, they said that they needed to get out of the house. There could be many reasons for this. Of course there are huge implications of allowing a home to be repossessed, not least the liability for the mortgage shortfall. I would only recommend allowing a house to be repossessed if the person had already made the decision to declare bankruptcy which would then free them from liability for any of the mortgage shortfall debt.
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