Can’t afford my bills… or anything else really?

Seeking Advice
1

I bought a house a bit over a year ago with the help of a divorce settlement for the deposit.
Before that, I was renting in the UK. I was working full time, and my child lived at home with me. I received housing benefits, some universal credit, and child benefits.

But as soon as I bought the house, my child went off to university, and all that extra financial help stopped.

Now, I’m living alone, paying the mortgage on a single wage.

I had some credit cards and, in the excitement of buying my first home, I racked up quite a few expenses, including home and garden renovations.

I can’t deny it – I’ve been irresponsible. When my credit was near the limit, I’d just get another card and keep going.

Now I’m facing a harsh reality: my credit score is awful, and my cards are maxed out. I can’t get any more credit.

To cover my bills, food, insurance, fuel, etc., and my credit card payments, I’m about £900 over what I earn.

For months now, I’ve had to rely on borrowing from family just to get by. I’ve sold a lot of my stuff, but I’m still nowhere near making ends meet.

I’ve thought about selling the house, but I don’t have any family to stay with, and I doubt I’d get a council property since I’d be seen as making myself homeless.

My credit card debt is about £20k.

I’ve cut back on everything I can, but I’m still stuck. What should I do? Does anyone have advice? I haven’t missed any payments until now, but things are starting to fall apart, and soon I won’t be able to afford even my priority payments.

2

Don’t pay the credit cards. It’s either the house or the credit cards…

3

Emory said:
Don’t pay the credit cards. It’s either the house or the credit cards…

I’ve kind of been doing this too, prioritising my mortgage over other debts.

4

Aeron said:

Emory said:
Don’t pay the credit cards. It’s either the house or the credit cards…

I’ve kind of been doing this too, prioritising my mortgage over other debts.

Yep! For us, it’s rent, utilities, cars, and insurance.

5

I’m in the same boat where there’s no money left after paying bills. What I’ve done is pick up a second job and signed up for debt management. I’d avoid debt settlement though.

6

Maybe think about creating a hostel or getting roommates?

7

Don’t stress – there are a few options: make extra money or cut your expenses.

  1. Can you take on a part-time or weekend job? That could help raise your income until you can pay off the credit cards.

  2. If you can still afford the house without the credit card debt, consider getting a consolidation loan to combine it all into one lower payment or talk to your creditors to see if they can work with you to avoid hurting your credit (e.g., lower payments, pay off over time).

  3. If the house is just too much even without the debt, maybe sell it, pay off the credit cards, and rent somewhere more affordable. Even renting a room could work.

In the meantime, look at your spending habits. You might be able to squeeze out some savings by canceling subscriptions, cutting back on dining out, budgeting meals, and negotiating lower rates on bills.

8

I live in the US, but is personal bankruptcy an option in the UK? If so, that could help. You might still be able to keep your house. I chose that route myself, and the only thing I regret is not doing it sooner.

9

I’m in a similar situation, but my teenage kids (12-16) are still living at home. I don’t have anyone who can help me either. I don’t have any advice right now, but I wanted you to know you’re not alone. Hopefully, we can get the advice we need. Hang in there.

10

Have you considered getting a roommate? Or maybe renting a small apartment and letting someone rent your house? That way you could downsize and keep your home until you’re in a better position.

11

Remember the basics: food, shelter, clothing, transportation. Those are your four walls. Pay those first, then prioritise everything else. If necessary, you might need to sell the house. Try to keep your housing costs to no more than 25-30% of your income, or it will take over your life.

12

Don’t pay the credit card bills. Sell the house, get a cheap apartment, and file for bankruptcy.

13

Gale said:
Don’t pay the credit card bills. Sell the house, get a cheap apartment, and file for bankruptcy.

This might be a dumb question, but wouldn’t the sale of the house go towards paying off the credit cards when applying for bankruptcy? I’ve never gone through bankruptcy, so I’m not sure how it works in this situation.

14

@Oak
In the US, a certain amount of equity is usually protected, like the ‘homestead exemption.’ If the same applies in the UK, given that the home purchase is recent, she probably doesn’t have much equity, so it might be protected. The federal homestead exemption in the US is $27,900 for a single person.

15

[deleted]

16

Peyton said:
[deleted]

Unfortunately, I can’t sub-let the house since I bought it on a shared equity scheme.