My wife and I have been struggling financially for a number of years. Well, we have always lived pretty close to the wire as we have never been able to get any savings behind us. We have always managed to pay the bills and debts and we have always had a pretty good credit history. We still do. Two years ago though we hit a particular bad financial patch where more money was going out than coming in and something had to be done. We were quite desperate at the time to be honest. We saw the adverts for a First Plus secured loan and applied for a loan of £20k. The adviser told us they couldn't give us a loan for £20k because she could see from our credit records we had considerably more debt than that. No, she couldn't lend us £20k but she would have to lend us considerably more (and I mean considerably more!) which surprised me because the amount was about 2/3s more than the equity in the house! We were pretty desperate and agreed and the rate came out at 10.9%. It was worked out that we would save something like £300 a month. Significant! However, then, the adviser made it quite clear that they expected us to take out payment protection because it was for such a large amount. My wife and I were under the impression that if we didn't accept we wouldn't get the loan. We should have walked away! We needed the money. The payment protection was another £180pm and did eat in to what we were saving each month. We were told that we would get the payment protection back as a lump sum after 5 years (about £17k). Unfortunately we found the payment protection a luxury we couldn't afford and I called to cancel and it was only then that I realised (foolishly) that they had put the £17k payment protection on the loan itself and I couldn't cancel it without losing the bulk of the £17k!!
Sorry, I'm going on I know but to cut to the chase, with all the interest rate rises since we took the secured loan out ( 2years ago) it has left us in a very serious financial situation. We will have to start defaulting on a number of debts within a month or so and we are currently relying on credit cards to get by. Since we took the secured loan out my wife and I have never been able to get any loans what-so-ever, not even from our own banks despite having a good credit history.
We don't know where to turn! Bankruptcy seems the only solution but we really don't want to lose our house. I know you don't necessarily lose it though bankruptcy but I suspect First Plus will want their cut. Having said that we did consolidate a little 6 months back with the mortgage provider which did eat into what little equity there was and the recent floods have meant our house, in all likelihood, will have declined in value. There is actually very little, if any, equity in the house now!!
It sounds like a lot of your debt is secured on your property, and secured loans cannot be included in an IVA. You will need to post more of your circumstances ie. how much unsecured debt you have and secured debt you have - that way people will be able to best advise which route you could take.
Keep posting- there are a lot of people who can help on here!
Please don't be embarrassed - we will be able to help and your case will be no worse that others I have seen in my career. The only way we can make suggestions to you is by knowing your exact circumstances. Can you confirm:-
1 The current value of your house
2 The amount you owe to the mortgage company and how much you pay each month.
3 The same as (2) for the secured loan
4 The amount you owe to unsecured creditors
5 The level of disposable income you have on a mothly basis, before making repayments to unsecured creditors.
Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
Everyone is in the same boat on here, and nothing shocks us. We all know how easy it is to get into such a mess. Facing up to things is the first battle, the rest will get easier with support from everyone on here.
Last edited by flashingblade on Wed Jul 18, 2007 12:37 pm, edited 1 time in total.