Possible Bankruptcy But Have Property Portfolio??

dannyboyracer · 8 December 2008 at 1:33AM

Hi all,

Been reading through this forum and haven't really found anyone in my position so thought id post a new thread. I am 28 and up until Jun 08 i was running a very successful building maintenance company alongside my property portfolio... life was great but the credit crisis has seen things go south and very quickly!

First to go was my building maintenance company, i had to shut up shop as i was just not getting the work in anymore, which left me only my property portfolio to live off. Currently i have 11 properties, some solely owned, some joint.... some make decent profit after paying the mortgage, some loose a little although the recent base rate cuts have helped. The problem now is that tenants in those BTL properties are also feeling the pressure and subsequently missing rental payments, things are tight but im able to repay every mortgage on time but haven't enough to live on and pay all my unsecured debt (credit cards, o/d etc).

My million dollar question is.... if i go BR what will happen to the properties? I will definately be able to continue paying the mortgages as i will still be getting in the rents. Will the OR let me keep these or will they be given back to the mortgage companies? If i am allowed to keep them i will still have an income of which after reasonable living costs the OR will be able to take a few £'s to repay my creditors over the coming years. Without the properties i will end up on benefits as ive only ever worked in construction and we all know whats been happening to that of late.

I have read that i can sell my BI to a family member or friend, does this go for both joint and solely owned properties.... I figure that the mortgage companies will be keen to let those jointly owned properties going so long as the mortgages are paid as the other person on the mortgage is not BR - not yet anyway :-) Does the same imply with those solely owned properties or will the mortgage companies not trust an undischarged BR to keep them going?

Im so confused, i read and read and read and still cant get the same answers from 2 people. I have worked my fingers to the bone to get my business to where it is today, to let my building company go bust was a massive blow, if i was to loose the properties as well then i know id feel like the world had ended.

Any help would be greatly appreciated.

Regards,
Dan

Merry_Gentry · 8 December 2008 at 1:50AM

Didn't just want to read and run Dan, so hello. I think you would be advised to get some advice from the free charities such as CCCS or CAB. I don't think you would be allowed to keep all those properties - your home, yes, but not the rest of them but I'm not an expert.

Hopefully, start of the new week, some more knowledgeable people will be along tomorrow morning, but in the meantime you really need to get some professional advice.

dannyboyracer · 8 December 2008 at 2:29AM

Ive contacted the CCCS and been told that a DMP would be the best option, the last house i purchased for my portfolio however is a major concern. I bridged the money whilst refurbishing the project but on completion no mortgage companies would offer me a mortgage as the house is a HMO (House in Multiple Occupancy)... even the company that i already had 8 other mortgages with which were all up to date and always paid on time (company incidentally was Bradford and Bingley who now arent lending anymore). I rent the house for 1750 a month but the interest alone on the bridging finance is 4000. Im therefore accumulating a snow balling debt every month. If i give the keys back the bridging company will no doubt auction the house and i will be liable for the shortfall... they are a very agressive company however and i think (and heard) that they will go for a bankruptcy staright away rather than be part of a DMP for many years to come. If they werent in the picture a DMP would be the answer...... AAAARGH HELP!!

fiveyearplan · 8 December 2008 at 8:37AM

Hi DBR and welcome. Why don't you give Business Debtline a ring. I take it you own these properties as sole trader or are you limited co? Can you list your debt. I think you would most likely lose your portfolio if BR. What if you sold the last property that is causing the most problem and swallowed the shortfall. Its hard to advise when we don't have the full picture.

Did you building maintenance firm have a lot of debt? What about your personal debt?

JCS1 · 8 December 2008 at 10:55AM

The OR would consider you buying the BI in your family home, but any rental properties vest straight away in the OR.

chevalier · 8 December 2008 at 11:05AM

dan please ignore the troll. sorry about that. Just hope that you can get it sorted.

What about selling some of the properties to be able to finance the rest?
chev

dannyboyracer · 8 December 2008 at 11:45AM

Havent yet heard about the Business Debtline, very helpful info i will call them this morning. With regards the failed building company i managed to wind it down with little if no debt, only got my end of year books to do but i recon ill be able to cover the costs myself and i still have a white van to sell if needbe... wana try and keep it however as although work is few and far between i do still have a couple jobs booked in after the new year.

With regards the last house i refurbished ive tried to sell it but its now its almost in negative equity and for the past few months ive battled to get a mortgage on it because its a HMO even though i had a squeeky clean credit file - if i did find a buyer i feel that they would battle to get a mortgage as well.... doubt a cash buyer would buy anything already refurbished with no scope to extend / improve. The bridging company has many people in my position and have agreed that they will give me another 6 months to keep trying for a mortgage only prob now is ive started missing payments so getting a specialist mortgage in a market where i now have bad credit is going to be impossible.

All properties are owned as a sole trader, considered ltd company when i and my business partner started but we didnt think the benifits outweighed the costs - wish i had gone that way though now!!!

Its my personal debt which is causing me the problems... £125k in all... ive only just started missing payments so still have time to look around and research any other avenues.

Cheers for the previous comments about a council estate or something, shows your mentality really and prob the reason why you no doubt live on an estate yourself :-) even if i lost everything id still land on my feet my friend maybe one day you can pull your head from your !!! and do the same. To all those with constructive comments many thanks.

RecoveringAlcoholic · 8 December 2008 at 11:47AM

Business Debt would normally be outside the remit of CAB.

Try Business DebtLine:

http://www.bdl.org.uk/

Cinderbrook · 8 December 2008 at 3:35PM

Hi,
Have you tried talking to your mortgage lender(s) directly and asking for lower rates or payment holidays. They don't like speaking to clients really but I had a go with mine (although still went BR) and they did offer a lower rate and payment holiday. If you did decide on BR this would be hugely expensive for the lenders and it seems that the climate may be changing slightly albeit for owner occupier, but I would still try and weedle anything out of the lenders and not be fobbed off. I ended up speaking directly to the underwriter, so maybe you could try that. With your most expensive property, personally I would get rid PDQ and take the loss. If you sold it at auction yourself, the auctioneers are pretty good at valuing and getting the reserve right. I found them to be the most helpful people in the long run. Selling at auction costs around £500 and would be cheaper than voluntarily reposessing. There are investors out there still and a tenanted property can be

Although I am totally against them, it could be that in your case without knowing the whole situation, an IVA might be a way to help you keep the property business. No doubt BDL will help on this score. Generally, you sound like you are a "worker" - there must be ways of generating more personal income. In my local area there seem to be quite a few "home improvers" around who are tidying up front drives/gardens, rebuilding walls etc. You no doubt have many skills at your disposal so why not just advertise locally ie leaflet drop. Another thought (and sorry these are a bit random), do you have landlord insurance to cover non payment of rent because even if your margins are tight it could be worth it if you decide to try to keep the properties. Also if the tenants do become troublesome, have you considered leasing to the local council? Good luck I don't think I would be ready to throw in the towel just yet.

Cinders

maxmycardagain · 8 December 2008 at 4:09PM

I like the way "the tenants" are reffered to, these are the mortgage payers and probably thinking that the LL is a safe sound guy and they have as long as they want in the places they are paying for when in reality the whole shebag makes the titanic look watertight...

I hope the OP has got all eleven bonds and deposits safe from the OR as £11,000 would be be gone in a flash, and if i were a private LL tenant and my bond/deposit went walkabaout on top of eviction im afraid i wouldnt be too happy.

maxmycardagain · 8 December 2008 at 4:11PM

chevalier wrote: »

dan please ignore the troll. sorry about that. Just hope that you can get it sorted.

What about selling some of the properties to be able to finance the rest?
chev

sound advice with the market in freefall and a credit crunch methinks...

Possible Bankruptcy But Have Property Portfolio??

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