in a real mess and finding it hard to sleep

[janet.p]

my husband and i have a house worth approx 195k. we owe 10k on an unsecured loan and about 14k on credit cards and a 140k mortgage. our credit rating at the moment is fine but we can't sustain our level of debt. my husband is self employed and is not even covering our outgoings at the moment. we have two young children and i am seeking part time work. our mortgage is on an interest only basis with no way of repaying the capital at present. our two year tie in comes to an end in july this year so we don't want to damage our credit rating before then as we want to shop around for a good deal on a new product. would an iva be suitable for us? would we be forced to sell our home to release the equity? or should we get a consolodation loan? which i'm not sure we could pay. we are in a real mess and i'm finding it hard to sleep. Please help!!

[size5]

As you have more assets than liabilities then an IVA looks to be out of the question.
What, therefore, are your options?
1 Unsecured loan.
2 Secured borrowing, either remo or secured loan
3 Try and ride out the storm till July
4 DMP

You could possibly make an argument for all, but prudence tells me to avoid advising you to take out debt to cover existing debt. There ARE circumstances where it can work, but if you bite off more than you can chew in pursuit of a "saving" on your monthly outgoings then you run what I would consider to be an unacceptable risk. 1 and 2 seem unacceptable therefore.
3 leaves you paying out more than you have and so you will inevitably run up more debt in the meantime as the shortfall in your budget needs to be met from somewhere, most likely from c/cards and or overdrafts.
4 damages your credit rating and MAY leave you in a weaker position when your mortgage deals ends, but at least it will stop you borrowing in the meantime, but if there is significant equity in your property and no mortgage arrears in the last 12 months then getting a new deal may not be as hard as you may imagine.
I'm sure Mike B or others may advise you further on that.

Good luck.

[luluj]

Why not attempt a re-mortage and take out the additional unsecured amount - as you have such equity in your property an IVA is not really going to be suitable - in the larger scale of peoples debt in this forum - your debt is minimal and this appears to be your best option.......will your mortgage company allow you a payment holiday for a couple of months? This may help to give some back up funds for every day living expenses and support you until the the re-mortage etc is considered / approved.

[Jo Rolland]

With your husbands current self employment not covering your household outgoings, has he considered looking for new employment on an employed basis? Or do you think that his income will increase?

[janet.p]

thanks so much for your responses. I suppose compared to some other people on here we don't owe that much but to us it is unmanageable. My husband is struggling at the moment as he always earns less in the winter so his earnings should increase from march/april. I also have a part time job interview tomorrow so that'll help if I get that. I don't think our mortgage company will offer a payment break unless you have overpaid so that's probably out of the question but i'll ring and check. Maybe the best option will be to increase our mortgage to pay off the debt when our deal is up in July. That scares me too though because then all our debt is secured on the house so if we cant meet those payments we'll risk repossession. We're also not in a great position to get a good deal as we would have to self cert again. Maybe trying to sell our house and downsize would be a good option but properties are taking up to a year to sell round here at the moment!

[MelanieGiles]

If you do remortgage to pay off the debts, make sure that you are not tempted to use the credit cards again. I suggest that you keep one with the lowest credit limit for emergencies, and keep it locked away from temptation.