Mortgage after Bankruptcy
Comments
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The property is owned by you until the repossession date. From the repossession date it is owned just by the lender.
In the case of a bankrupt, the beneficial interest (usually the equity in the property) is due to the Official Receiver until it has been dealt with, the property still belongs to you.
The official receiver will never own the property, at least not a residential property that is (or was) your home.
Do you have a reference for that? The vesting of all assets in the trustee is automatic and takes place immediately upon appointment of the trustee.
See IA 1986: S 306
Vesting of bankrupt’s estate in trustee.
(1)The bankrupt’s estate shall vest in the trustee immediately on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.
(2)Where any property which is, or is to be, comprised in the bankrupt’s estate vests in the trustee (whether under this section or under any other provision of this Part), it shall so vest without any conveyance, assignment or transfer.No reliance should be placed on the above! Absolutely none, do you hear?0 -
Thanks again for the replies. I've read quite a bit on the Financial Ombudsman website for their decisions. This following extract from an FO Decision seems quite similar in terms of ownership (althoygh linked to a buy to let mortgage)?
"Mrs C’s bankruptcy effectively meant that the ownership of her property passed to the official receiver. It was then for the official receiver to decide whether or not to sell the property and use the proceeds, if any, to repay Mrs C’s creditors. As it was the property was let and the official receiver took the decision not to sell it but to take over the management of the tenancy and collection of the rent.
NRAM initially said that Mrs C’s mortgage didn’t form part of her bankruptcy. This isn’t correct. It does, but because the mortgage is a secured loan the official receiver didn’t make any repayments towards it. He left it to NRAM to decide if it wished to take action to take the property into its possession with a view to selling it and using the proceeds of that sale to repay Mrs C’s debt to it."
Can't post the link but its decision number 1105680 -
Thanks again for the replies. I've read quite a bit on the Financial Ombudsman website for their decisions. This following extract from an FO Decision seems quite similar in terms of ownership (althoygh linked to a buy to let mortgage)?
"Mrs C’s bankruptcy effectively meant that the ownership of her property passed to the official receiver. It was then for the official receiver to decide whether or not to sell the property and use the proceeds, if any, to repay Mrs C’s creditors. As it was the property was let and the official receiver took the decision not to sell it but to take over the management of the tenancy and collection of the rent.
NRAM initially said that Mrs C’s mortgage didn’t form part of her bankruptcy. This isn’t correct. It does, but because the mortgage is a secured loan the official receiver didn’t make any repayments towards it. He left it to NRAM to decide if it wished to take action to take the property into its possession with a view to selling it and using the proceeds of that sale to repay Mrs C’s debt to it."
Can't post the link but its decision number 110568
Try this one as well. Seems identical to you.
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=80248No reliance should be placed on the above! Absolutely none, do you hear?0 -
Thanks fir the reply. They did want me to sign a Notice of Assidnment (from memory?) but was advised not to by OR. NRAM refused to accept keys back
Slightly confused though whether NRAM should forced to remove by FO or its on until repossession falls off? I understood default date should be date of bankruptcy? Does the property not become owned by OR?
Thanks again
Hi Chris,
I'm no expert but....
Under section 382 of insolvency Law, the mortgage debt (secured and unsecured) forms part of the Bankruptcy from the start and any shortfall after the property is repossessed, automatically drops into the bankruptcy as bankruptcy debt as its (contingent debt)...As bankruptcy debt, the default date will need to reflect that it was settled in bankruptcy. (Default date when you went bankrupt and settled when you are discharged)
http://www.legislation.gov.uk/ukpga/1986/45/section/382
I would start official complaint with the Lender quoting section 382 and if no help, after 8 weeks, take it to the Ombudsman...
Best wishes0 -
no bud, i didnt have a repossession order but was declared bankrupt.
yorkshire building society. (accord mortgages)0 -
From lender's POV, they repossess property and file that on credit report. Then they sell the property and look to (ex-) owner for repayment of shortfall. At that point the shortfall falls into the bankruptcy, but the repo was noted on the credit report at the time of repossession.I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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From lender's POV, they repossess property and file that on credit report. Then they sell the property and look to (ex-) owner for repayment of shortfall. At that point the shortfall falls into the bankruptcy, but the repo was noted on the credit report at the time of repossession.
I understand it from an administrator at the lender's point of view, but it doesn't coincide with the legal situation. And they've been admonished about this by the Ombudsman before.
It ought to be possible for the credit record to be corrected, so that it accurately shows the legal position, ie the debt fell into the bankruptcy in 2010.No reliance should be placed on the above! Absolutely none, do you hear?0 -
I understand it from an administrator at the lender's point of view, but it doesn't coincide with the legal situation. And they've been admonished about this by the Ombudsman before.
It ought to be possible for the credit record to be corrected, so that it accurately shows the legal position, ie the debt fell into the bankruptcy in 2010.
I agree GDB2222....The mortgage debt would have been included in the bankruptcy from April 2010 (the start of OP's bankruptcy) as it was a debt that was taken out before the start of bankruptcy and the date of repossession and sale(shortfall) doesnt change the fact it is still bankruptcy debt (contingent debt) and as such it has to be recorded in line with the bankruptcy.
Lenders can take as long as they like to repossess and sell a property and this is out of the owners control, which is why this legislation was put in place to protect the bankrupt......imho!;)0 -
I agree GDB2222....The mortgage debt would have been included in the bankruptcy from April 2010 (the start of OP's bankruptcy) as it was a debt that was taken out before the start of bankruptcy and the date of repossession and sale(shortfall) doesnt change the fact it is still bankruptcy debt (contingent debt) and as such it has to be recorded in line with the bankruptcy.
Lenders can take as long as they like to repossess and sell a property and this is out of the owners control, which is why this legislation was put in place to protect the bankrupt......imho!;)
Taking this to its logical conclusion: If the OR had no interest in the property and you continued paying the mortgage for a number of years and obviously refused to sign anything with the lender, repossession could take place many years later. If it happened to be 7 years post bankruptcy, the shortfall still falls into the bankruptcy, but you would expect the repossession to be recorded as the date of bankruptcy and therefore fall off the record before it is put on!I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Taking this to its logical conclusion: If the OR had no interest in the property and you continued paying the mortgage for a number of years and obviously refused to sign anything with the lender, repossession could take place many years later. If it happened to be 7 years post bankruptcy, the shortfall still falls into the bankruptcy, but you would expect the repossession to be recorded as the date of bankruptcy and therefore fall off the record before it is put on!
Hi silvercar,
If it was 7 years later, then I agree, you'd hit a grey area but under section 382 of insolvency law, the shortfall is bankruptcy debt even "after discharge from bankruptcy" as it was a debt/liability which the OP became subject after bankruptcy because of an obligation incurred before his bankruptcy.....Insolvency law doesn't put "any" time restrictions on this...thats why they include "contingent debt" in the legislation, as the debt is based on a "future event" (in this case a repossession)
In this case the OP's repossession took place over 2 years after but as it was bankruptcy debt from the start of the bankruptcy, the moment the shortfall became contingent debt and settled under bankruptcy, is the moment when the default date needed to be corrected to reflect the bankruptcy...If there is no bankruptcy, then the repossession date would stay the same but where bankruptcy is present, insolvency law has final say....
Just wanted to add.....
Closed accounts stay on file for 6years so the mortgage account will stay on the OP's credit report 6 years from the date the Lender sold the property BUT as bankruptcy debt, the default marker(repossession) should be backdated to the bankruptcy order (April 2010) when this is done, the default should automatically drop off the credit report as its been over 6 years since the bankruptcy and the mortgage account should just show as up-to-date and closed.0
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