Hi,

This is my first post so apologies if I'm duplicating any questions.

I'm really concerned over the situation my sister and her family (husband and two young children) are in financially. They own their own house on which they are managing to pay the mortgage but against this have a secured loan and credit card debts, on top of their monthly utility bills, which have slipped considerably over the last few months (value of house - ~£200k, mortgage outstanding £174k, secured loan £34k)

My sister had her second child in November last year and knew the financial situation was not going to be good so sought advice from the CAB (having already taken a mortgage holiday whilst she would be on maternity leave). The CAB said that because they were not in arrears with anyone then they could not help them. As the months passed the reminder letters started coming through the door and my sister believed their only way out was to try and sell the house to clear the secured loan and mortgage and to see if the council would be able to house them.

Four months ago they went to see their local county council and were told by the advisor they met not to sell the house and to send all their chasing letters to him and to focus solely on paying the mortgage. He said that he would speak to the creditors and get the monthly payments reduced. After several months the letters had not stopped, so my sister contacted the advisor again to be told that he could not help them any more. Over this period they have incurred an extra £2k worth of debt!

My sister lodged a complaint against the advisor and has today received a call from a manager at the council. The manager has advised that because they are paying the mortgage that they do not need help, and would not be rehoused!? The mortgage is the only thing they are paying because that was the advice they were given. The manager advised that if they sold the house to clear their debts they will be making themselves homeless and the council will not rehouse them.

Last week, my sister set up an agreement with a debt agency who have worked out a monthly amount to pay their creditors so that debt collectors don't come knocking at the door. This leaves them with no spare cash to pay for their eldest son's school dinners and uniform or to be prepared for any household emergencies, eg appliances that go wrong, etc.

This is the crux of this conundrum. Should they be default on their bills, or should they default on the mortgage, as they can't pay both? It felt like defaulting on one is the only way they will receive help.

If they default on the mortgage and the house gets repossessed, rehousing by the council will be required and they will still have a secured loan to pay off, along with monthly bills. Even if council house rent is lower than the mortgage they currently have to pay, the secured loan is the thing that will sap their monthly income.

Does anyone have any advice on what they can do to try and get themselves out of the current situation as they have exhausted most avenues they can think of. It's incredibly frustrating to see as it seems no-one seems to be able to help until the utilities are cut off, or until the bricks of their house have been removed one by one.

Thanks in advance,
tlb