Hi Vanessa and Stewart
I am sorry to hear that the Company has decided to lay Stewart off, and as for Private medical cover I also wouldn't bother with that even if they took Stewart on with his existing MM.
I know that some times the fight is all but gone from us when this happens but it must be worth talking to the company to see if they can lay him off due to his MM? Stewart might then be able to claim more Money from the Government, as for the Home am sorry to see its in negative equity, BUT if this was me and My Young Bride we would sell the house and try and get on the Social Housing system and you can declare yourself "Bankrupt" or try and get help sorting out any debts you have (including the mortgage shortfall) it can be sorted that you pay a minimum and pay the big debts first then move on to the next when that one is complete.
I know it wont be easy but the sooner you tackle the problem and make those aware what is going to happen the sooners its solved.
Good Luck and my first port of call would be Citizens advice bureau (CAB)
Love Tom Onwards and Upwards xx