We really don't know which way to turn

[david.y]

Hi,
My wife and I are considering whether or not to go into bankruptcy. We do have credit cards but the biggest problem is a consolidation loan we took out with First Plus almost two years ago. The mortgage is on a fixed rate but the First Plus loan just keeps going up and up. We have been close to the wire for a few years and the First Plus loan was a way to reduce the monthly out-goings. What a mistake! What is really frustrating is that we only wanted a secured loan of around £20k at the time but they actually refused to give us that amount, insisted they go through our total debt and then said they could only offers us a secured loan of our much bigger debt (£70k)! We were desperate and agreed. Worse still they told us for a loan of that amount they expected us to take out a payment protection which cost £20k and this went on the loan too! We are now paying in excess of £200 just on the payment protection. I asked a year ago if this could be cancelled but they insisted we would only get a rebate of £5k!
I know in bankruptcy you don't always lose your house but I suspect First Plus will insist on the house being repossed if we did go into bankruptcy. Six months ago we did consolidate again with our mortgage provider and with the recent floods and the consequencial house price declines it is leaving little if any equity in the house.

We really don't know which way to turn. The only way that we are surviving at the moment is through credits cards and so far we haven't defaulted on any debt yet.

Any advice would e really welcome.

[MelanieGiles]

Hi david and welcome to the forum

Do you have other debts as well as the secured ones? If so, bankruptcy proceedings will remove those from the equation, leaving you to only service your secured loans. Is this affordable? If not, then you may have to face your property being repossessed and sold, but at least you will be free from the clutches of extremely penalising lending.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk