I have built up substantial debts

[markp]

Good Afternoon,

I have built up substantial debts since seperating from my ex 3 years ago.
Mortgage £275k
Loans £43k, HP £3.5k, credit cards (x6) £50k and overdrafts £6k.

My house was up for sale at £425k, enough to payy all off and have some left over to start again. But after 1 yr I have only had 1 offer of £300k, which I didnt take.

I have no arrears yet, but from 1st Jan 09 this will change. Work is paying £3k / mnth at the moment.

Other outgoings Rates, Hs ins etc £600 / mnth.
mortgage £1100 per mnth dropping next mnth by 1%. The house I am selling is unlet, I am staying in my new partners house. I will not get anything from her except board and lodgings.

What should I do, I have £15k facility on credit cards that I could call on, but I dont think this is a good idea??

I would be grateful for your input as not selling the house has upset my plans.

Regards

Mark

[size5]

Good afternoon and welcome to the forum markp.

You certainly have some issues here that need resolving and I would certainly agree that using any remaining credit to "tide you over" so to speak will only add to your problems.

The house issue first. As any asset is only worth what people will pay for it then as it stands it is only worth £300k. However, from your perspective I quite understand that that figure is nowhere near what you would ideally want for it. Is it possible, therefore, to let it out to cover the mortgage payment, or at least as much of it as you can, until the market recovers, or alternatively going back to live there full time yourself? You also mention that you will have arrears from 1st jan. Presumably this is because ypu have so many other outgoings, i.e debts? If that is so, then you must divert enough money to pay the mortgage BEFORE you pay any other debt repayments.

Because there are a few imponderables in your situation, I would suggest that you speak to a professional directly as soon as you can. You may wish to visit www.iva.com to have a look round there at the reviews etc. Take time to speak to 2 or 3 providers and make sure you know what ALL your options are before you make your next move. There will be a solution(s) for you, but you need to know the pros and cons for all the solutions, as they apply to your situation, so that you can make your own informed decision.

Regards.

[Michael Peoples]

Hi Mark and welcome.
There are a number of options available and you should speak to an IP soon to discuss everything. However, it does appear that you are insolvent in that you cannot pay your creditors on the contractual payments without incurring further credit. You have debts in excess of £100k which would take £2-3000 per month just to service which clearly is not sustainable. The equity is your property is irrelevant as it is unascertained given the state of the housing market.

I would be loathe to use up the remaining credit unless your property has been agreed for sale and is guaranteed to complete soon as it will soon run out and your debts will only have increased by £15k.

An IVA is certainly an option and given that your mortgage payment will be reducing to below £1,000 it may be possible to rent out the property for most if not all of the cost. The property could then remain for sale until the market has recovered and the optimum price obtained. This could achieve an excellent return to creditors and possibly even payment in full. Creditors may even allow you to retain some of the equity to put down a deposit somewhere else. Regardless, it would give you breathing space to sell the property for it's true price.