Advice needed...

A question about : Advice needed...

Hi,

My name is Darren and despite being a member for a while now but have never ventured onto the forum.
As the title suggests I could do with some much needed advice - I have been in contact with Stepchange and the like but wanted some advice from those on the same side of the fence as me, so here goes.....

My wife and I collectively owe approx. Ј30-Ј40k and are currently paying token payments to our lenders.
We are keen to rid ourselves of this debt asap as we currently live in a one bedroom flat with two growing children and desperately need to move.
To make matters worse we are in negative equity to the tune of around Ј10-15k .

We were originally planning to embark on an IVA but due to the length of time this would take we are unsure as to whether to proceed this way.
We have now started to consider Bankruptcy and possibly handing back the keys to the house, but such a drastic measure is naturally a scary thought, however, as said, we would like to clear this chapter of our lives asap and move on and build a more solid future for our children.

Any advice would be massively appreciated, especially from those in the same/similar situation that have chosen the bankruptcy route or any other for that matter.

Thanks in advance,

Darren

Best answers:

• Did Stepchange offer bankruptcy as an option for you?
  It seems like you are going to need a bigger home for your family, so is it worth trying to keep the small one you have now? If it was me, I'd stop paying the mortgage and save the money towards rented accommodation. It takes months for the eviction process to start when you stop paying, just get used to lots and lots of phone calls and letters.
  If you do give the keys back, do not sign any paperwork sent out by your mortgage provider as it could still leave you liable for any shortfall.
  Make sure to get bank accounts setup with either the co-op or barclays and if you bank with the same company as your mortgage provider, get this done ASAP and have all direct debits and income directed into the new account. If you choose to go with the co-op, do not tell them about your intention togo bankrupt (the account should be fine once made bankrupt).
  Could you also post a SOA using https://www.stoozing.com/calculator/ ?
• Top prioroty is your housing. You cant go for a debt solution that means you have to live somewhere too small for 5 years.
  You need to move to somewhere larger. This can't be by taking out a bigger mortgage as you are only paying token payments to your debts at present and so your credit record must be poor. Your unsecured debt is therefor e going to increase with the mortgage shortfall, whether you sell the house or hand back the keys.
  With then 40-50k of unsecured debts and having to pay the rent on a lrger place, I can't imagine how you could afford an IVA. And with no property to protect it would be pointless. So I think bankruptcy is your best option.
  Usually the best order of events in this sort of situation is to stop paying the mortgage (scary!) so that you can save up a deposit to rent. Is there anyone (grandparents?) that could act as a guarantor for you renting? Then move, hand back the keys, and then go bankrupt.
  If it seems impossible for you to rent anywhere, then going bankuprt may be your best option - the local council will have to rehouse you when the place is repossessed.
• Hello there,
  I can see that you've had some excellent advice so far. If you would like to learn a little more about the bankruptcy process we have a useful fact sheet which you can find here.
  Very best wishes,
  David @ National Debtline.
• Many thanks to those that have responded to date, your opinions/recommendations are valuable.
  Just a quick and fairly simple ask - for how long after discharge would it be difficult to obtain credit?
  I have received/read varying views and am concerned about the ability to obtain a mortgage after discharge - after all, this would be our main goal in all of this so would welcome views of those having been through the process or know the outcomes well.
  Again, thanks in advance - your advice is highly regarded.
  Darren
• The bankruptcy stays on ur file for a further 5 years after discharge, so 6 years in total. I would advise u to build ur credit rating up slowly.once.it.is squeaky clean. Although I.believe.some mortgage providers ask if u have ever been declared bankrupt, I'm not sure.on.the whole.mortgage after br process.
• I think Rachael has answered the query perfectly. In theory you could apply for a mortgage the minute you've been discharged but it's far more likely that you would be accepted once the bankruptcy has fallen off your credit file. As previously mentioned, some lenders may ask if you've ever been bankrupt before as a matter of course. I have spoken to many people who now have mortgages since previously being bankrupt - so I know it's possible.
  - David.
• Your problem isn't likely to be your credit rating but your lack of income and deposit. After all at present you are barely able to afford a 1 bedroom place. In 6 years your children will be older and more expensive in most ways, although childcare costs should reduce.
  By the time you have a large enough deposit saved up, your credit rating will probably be fine!
• Hi folks,
  Many thanks again for the responses.
  I just have a couple of others question you may be able to help me with, here goes:
  The rental route is the way that we would like to go but our biggest worry is being accepted, obviously our credit rating is poor so am apprehensive of travelling too far down the not paying your mortgage road to find we will not be accepted for a rental property.
  My parents are happy to act as guarantors and we should have some money available for the deposit etc but will this be enough? I have heard they also charge for checks? so if we fail we'll be loosing much needed funds.
  Also, obviously the expense of the bankruptcy needs taken into account, which could pretty much wipe out the available funds we have!?
  I am aware of charities that offer help but as of yet had not had chance to look into - would we even be eligible?
  Darren
• If your parents are home owners, then you should have little problem if they act as guarantors. Mak eit plain to the letting agent before hand that you are likely to fail a credit check and you are only prepared to pay the fee for the check if your parents' being guarantors will be sufficient.
  re charities - go to your local CAb and they will discuss ioptions. Some CABs will have a local charity that no-one outside the area knows about. Then there are charities related to you or your partner's jobs - there are a lot more of these than you might imagine! And if none of those work for you, then there are the trust funds set up by the big utility companies.
  But your priority is to move first, then go bankrupt. So this can wait ...
• I went.through a."big" rental company for my rental.and.was scared.to death that they'd decline. All of.my accounts were defaulted (it was just before I went br) but my father.acted as guarantor so they weren't bothered
• Hello again,
  Its been a little while since my last post and thought I'd update...... and ask a whole load of questions again!
  Well, we've found a rental property(!) and am due to sign the papers and collect the keys a little later today. All good....however, in all the commotion in finding and securing a rental not to mention going through a massively busy time at work we've took our eye off the ball and am now panicking about some of the details!!
  As ever I'd much appreciate your advice on the following:
  These are in no particular order as I'm writing as I think, plus I apologise if some of these concerns seem daft/trivial but, as said, its only this morning that I've woke and thought "s**t! there are lots of things we've not planned for/taken into account!!"
  - Obviously I've not paid the mortgage for the past few months, what should I expect from the mortgage company now? we don't have funds to go bankrupt yet (or probably anytime soon, if under our own steam) so do we tell them that we intend to go bankrupt?
  - Obviously their correspondence will be sent to the mortgaged address - how long do I carry on collecting from there/do I let them know we are not there any longer?
  - I assume I just notify my utility companies and council that I am moving? and that I will resume council tax payments at new address?
  - The cost of the rental is approx. Ј175 more than our current mortgage. This is partly offset by the fact that the property is closer to school and travel costs are now nil, plus my parents are making up any shortfall left.
  However, despite the reasons above, it has only really just dawned on me that this could look bad - is this the case? do they have any power to say that we should not have done this and order us out?
  Thanks in advance for any advice sent.
  Darren
• The OR is not going to be overly concerned about your new rental. They may query why it is more expensive and you can explain that you need the space etc. As long as you are not living in a castle or have chosen something quite obviously way above what you need it should be fine.
  I personally wouldn't tell the lender at this point, just because it adds more pressure. They are then more likely to phone you/write to you and hassle you as they know they have a finite amount of time to persuade you of the error of your ways
  just remember DON'T sign anything from the mortgage company or to do with the mortgage house as you don't want to make yourself liable for the debt after bankruptcy (you should be fine but just be aware).
  df