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  • FIRST POST
    • ChrisHoll
    • By ChrisHoll 18th Mar 17, 9:56 AM
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    ChrisHoll
    Mortgage after Bankruptcy
    • #1
    • 18th Mar 17, 9:56 AM
    Mortgage after Bankruptcy 18th Mar 17 at 9:56 AM
    Hi all

    This is my first post on the forum so apologise if my questions gave already been answered but was hoping for some guidance/advice.

    Unfortunately following a relationship breakup, I was declared bankrupt in April 2010. My ex moved out leaving me to pay the bills and mortgage.

    The house was finally repossessed by NRAM in July 2012 after the OR determined they had no interest in the property due to negative equity. It was finally sold with £65k owing which NRAM continued to chase me for.

    Fast forward 7 years, I am now looking to obtain a new mortgage with my new partner, the bankruptcy is no longer on my experience credit file and no debt at all. However, the repossession is showing and will not drop off until July 18. Credit score is Fair 791.

    From reading the forum and other research, I believe that the shortfall and repossession should have been included within the bankruptcy and NRAM or Landmark as they are now should have removed this from my credit file. Would this be correct?

    We have applied and been offered a mortgage but at terms of 6.1% despite a 25% deposit. If NRAM have to removed (or are forced to remove via Financial Ombudsman), would this have a positive or negative impact on my credit rather and ability to obtain the mortgage? The length of credit agreement seems to be a positive on the credit file?

    I hope this makes sense and explains the facts. Any assistance or advice would be gratefully received

    Many thanks
Page 1
    • GDB2222
    • By GDB2222 18th Mar 17, 10:00 AM
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    GDB2222
    • #2
    • 18th Mar 17, 10:00 AM
    • #2
    • 18th Mar 17, 10:00 AM
    I'm astonished the lender was chasing you for the shortfall even though you were bankrupt. Have you asked them to explain?
    No reliance should be placed on the above! Absolutely none, do you hear?
    • ChrisHoll
    • By ChrisHoll 19th Mar 17, 12:27 AM
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    ChrisHoll
    • #3
    • 19th Mar 17, 12:27 AM
    • #3
    • 19th Mar 17, 12:27 AM
    They were really unhelpful and despite numerous calls to advise of the bankruptcy, they kept calling and sending letters.

    Should they have to remove from my credit file? Does it matter that the debt has passed fro NRAM to Landmark?
    • GDB2222
    • By GDB2222 19th Mar 17, 8:47 AM
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    GDB2222
    • #4
    • 19th Mar 17, 8:47 AM
    • #4
    • 19th Mar 17, 8:47 AM
    Make a formal complaint, and go to the Financial Ombudsman if necessary. You are entitled to an answer, and it looks like harassment.

    They had the right to repossess the house much sooner than they did. How come they left you in place until 2012? By that time, had you been discharged from bankruptcy?
    No reliance should be placed on the above! Absolutely none, do you hear?
    • silvercar
    • By silvercar 19th Mar 17, 9:28 AM
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    silvercar
    • #5
    • 19th Mar 17, 9:28 AM
    • #5
    • 19th Mar 17, 9:28 AM
    A popular NRAM product was the together mortgage, that was part mortgage and part unsecured loan. The unsecured loan would have fallen straight into the bankruptcy - other than NRAM retained the right to secure the loan on the property if you defaulted.

    Either way the shortfall on the mortgage should have fallen into the bankruptpcy unless you signed anything after you were made bankrupt taking responsibility for the mortgage. This will include any paperwork transferring the mortgage from joint names to your name or any new deal eg fixed rate they were offering.

    It is common for lenders to not accept the keys being handed back if the borrower is not prepared to sign anything and bankrupts are generally advised not to sign anything that could be interpreted as acknowledging the responsibility for the debt. So repossession can take as long as the lender wishes. You can't complain that they were too slow to repossess.

    If they repossessed in 2012 then that's what will show on your credit file. The answer would be to take a mortgage without redemption penalties and remortgage to a cheaper rate when you can.
    • ACG
    • By ACG 19th Mar 17, 10:42 AM
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    ACG
    • #6
    • 19th Mar 17, 10:42 AM
    • #6
    • 19th Mar 17, 10:42 AM
    I can not help re the bankruptcy, but I am surprised you have been offered a rate of 6.1%. I would expect there to be better options out there but I suppose it depends on how it all appears on your credit report.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • rjwr
    • By rjwr 19th Mar 17, 4:22 PM
    • 279 Posts
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    rjwr
    • #7
    • 19th Mar 17, 4:22 PM
    • #7
    • 19th Mar 17, 4:22 PM
    get yourself an independent broker. This might mean paying for their advice. My mortgage is 1.9%. Cost of advisor £2000. The "free" ones didnt even come close.

    good luck
    • ChrisHoll
    • By ChrisHoll 19th Mar 17, 4:39 PM
    • 5 Posts
    • 1 Thanks
    ChrisHoll
    • #8
    • 19th Mar 17, 4:39 PM
    • #8
    • 19th Mar 17, 4:39 PM
    get yourself an independent broker. This might mean paying for their advice. My mortgage is 1.9%. Cost of advisor £2000. The "free" ones didnt even come close.

    good luck
    Originally posted by rjwr
    Thanks for the reply - do you mind me asking who your mortgage is through and did you have a previous repossession? Thanks
    • ChrisHoll
    • By ChrisHoll 19th Mar 17, 4:44 PM
    • 5 Posts
    • 1 Thanks
    ChrisHoll
    • #9
    • 19th Mar 17, 4:44 PM
    • #9
    • 19th Mar 17, 4:44 PM
    A popular NRAM product was the together mortgage, that was part mortgage and part unsecured loan. The unsecured loan would have fallen straight into the bankruptcy - other than NRAM retained the right to secure the loan on the property if you defaulted.

    Either way the shortfall on the mortgage should have fallen into the bankruptpcy unless you signed anything after you were made bankrupt taking responsibility for the mortgage. This will include any paperwork transferring the mortgage from joint names to your name or any new deal eg fixed rate they were offering.

    It is common for lenders to not accept the keys being handed back if the borrower is not prepared to sign anything and bankrupts are generally advised not to sign anything that could be interpreted as acknowledging the responsibility for the debt. So repossession can take as long as the lender wishes. You can't complain that they were too slow to repossess.

    If they repossessed in 2012 then that's what will show on your credit file. The answer would be to take a mortgage without redemption penalties and remortgage to a cheaper rate when you can.
    Originally posted by silvercar
    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
    • GDB2222
    • By GDB2222 19th Mar 17, 5:21 PM
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    GDB2222
    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
    Originally posted by ChrisHoll
    That's completely logical. Which is why I suggested complaining right up to the Ombudsman until it's sorted out, or they give you an explanation you are satisfied with.
    No reliance should be placed on the above! Absolutely none, do you hear?
    • silvercar
    • By silvercar 19th Mar 17, 6:18 PM
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    silvercar
    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
    Originally posted by ChrisHoll
    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.
    I'm a Board Guide on the Debate House Prices & the Economy, House Buying, Renting & Selling, Mortgages and Endowments, In My Home incl DIY, Overseas Holidays & Student boards.
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    • GDB2222
    • By GDB2222 19th Mar 17, 6:24 PM
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    GDB2222
    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.
    Originally posted by silvercar
    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 bankruptís estate in trustee.

    (1)The bankruptís 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 bankruptís 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?
    • ChrisHoll
    • By ChrisHoll 19th Mar 17, 7:32 PM
    • 5 Posts
    • 1 Thanks
    ChrisHoll
    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 Cís 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 Cís 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 Cís mortgage didnít form part of her bankruptcy. This isnít correct. It does, but because the mortgage is a secured loan the official receiver didnít 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 Cís debt to it."

    Can't post the link but its decision number 110568
    • GDB2222
    • By GDB2222 19th Mar 17, 8:35 PM
    • 13,957 Posts
    • 74,933 Thanks
    GDB2222
    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 Cís 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 Cís 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 Cís mortgage didnít form part of her bankruptcy. This isnít correct. It does, but because the mortgage is a secured loan the official receiver didnít 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 Cís debt to it."

    Can't post the link but its decision number 110568
    Originally posted by ChrisHoll
    Try this one as well. Seems identical to you.

    http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=80248
    No reliance should be placed on the above! Absolutely none, do you hear?
    • ukamber1
    • By ukamber1 20th Mar 17, 11:14 AM
    • 102 Posts
    • 30 Thanks
    ukamber1
    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
    Originally posted by ChrisHoll
    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 wishes
    • rjwr
    • By rjwr 20th Mar 17, 9:48 PM
    • 279 Posts
    • 184 Thanks
    rjwr
    no bud, i didnt have a repossession order but was declared bankrupt.

    yorkshire building society. (accord mortgages)
    • silvercar
    • By silvercar 21st Mar 17, 8:00 AM
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    silvercar
    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.
    • GDB2222
    • By GDB2222 21st Mar 17, 9:31 AM
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    • 74,933 Thanks
    GDB2222
    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.
    Originally posted by silvercar
    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?
    • ukamber1
    • By ukamber1 21st Mar 17, 9:57 AM
    • 102 Posts
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    ukamber1
    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.
    Originally posted by GDB2222

    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!
    Last edited by ukamber1; 21-03-2017 at 10:04 AM.
    • silvercar
    • By silvercar 21st Mar 17, 1:23 PM
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    silvercar
    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!
    Originally posted by ukamber1
    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!
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