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  • FIRST POST
    • zak74
    • By zak74 10th Jan 18, 10:17 PM
    • 21Posts
    • 2Thanks
    zak74
    Bankruptcy?
    • #1
    • 10th Jan 18, 10:17 PM
    Bankruptcy? 10th Jan 18 at 10:17 PM
    I rent out a flat. Today Iíve been told that it needs a lot of work done to the electrics and that my tenants need to move out as itís not safe. Itís going to cost me around 5k repairs which I donít have. I have re red the flat out for 4 years due to negative equity as unable to sell. My husband and I have a mortgage on our home. I canít get a loan to pay for the repairs as I have outstanding debt of 12k. I defaulted last year and at the minute pay token payments. Bankruptcy is a huge decision but may be my only one. I just want to hand the flat keys back to the mortgage company and be rid of it. I canít afford to pay 2 mortgages when my tenants move out. If I applied for bankruptcy would I lose my home? would my home? Please help. I donít know what to do
Page 1
    • sourcrates
    • By sourcrates 10th Jan 18, 11:34 PM
    • 13,073 Posts
    • 12,384 Thanks
    sourcrates
    • #2
    • 10th Jan 18, 11:34 PM
    • #2
    • 10th Jan 18, 11:34 PM
    I rent out a flat. Today I’ve been told that it needs a lot of work done to the electrics and that my tenants need to move out as it’s not safe. It’s going to cost me around 5k repairs which I don’t have. I have re red the flat out for 4 years due to negative equity as unable to sell. My husband and I have a mortgage on our home. I can’t get a loan to pay for the repairs as I have outstanding debt of 12k. I defaulted last year and at the minute pay token payments. Bankruptcy is a huge decision but may be my only one. I just want to hand the flat keys back to the mortgage company and be rid of it. I can’t afford to pay 2 mortgages when my tenants move out. If I applied for bankruptcy would I lose my home? would my home? Please help. I don’t know what to do
    Originally posted by zak74
    Hi,

    All assets are at risk in bankrupcy, which is why you need expert advice on your options.

    National Debtline are a good starting point, or any of the free debt charities can offer you advice.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • silvercar
    • By silvercar 11th Jan 18, 8:48 AM
    • 36,403 Posts
    • 153,892 Thanks
    silvercar
    • #3
    • 11th Jan 18, 8:48 AM
    • #3
    • 11th Jan 18, 8:48 AM
    One option would be to hand back the keys on the rentail. Let the mortgage company deal with that one.

    Eventually they will come to you to deal with the negative equity and you can set up a realistic payment plan, based on what you can afford. Lenders know that repossession is a last resort, they won't expect blood out of a stone.

    How much equity is there in your home? That would be a key question if you are thinking of bankruptcy.
    • zak74
    • By zak74 11th Jan 18, 9:02 AM
    • 21 Posts
    • 2 Thanks
    zak74
    • #4
    • 11th Jan 18, 9:02 AM
    • #4
    • 11th Jan 18, 9:02 AM
    Iím considering handing the keys back. I the flats are selling for about 50k at the minute and I owe 72k on it. There is 40kbequity in my house but weíve tried to remortgage and been refused probably down to my debts. I want to hand the flat back and come to a payment plan. I would rather pay back what I owe and I want to protect my house. Will they let me pay it back for however many years it will take me?
    • brightonbelle
    • By brightonbelle 11th Jan 18, 10:39 AM
    • 89 Posts
    • 17 Thanks
    brightonbelle
    • #5
    • 11th Jan 18, 10:39 AM
    • #5
    • 11th Jan 18, 10:39 AM
    If you've got a house don't go bankrupt unless your husband can raise your half of the equity to buy the beneficial interest, if you do and he can't the house will have to be sold and there isn't anything you can do to stop it sadly.
  • National Debtline
    • #6
    • 11th Jan 18, 12:46 PM
    • #6
    • 11th Jan 18, 12:46 PM
    Iím considering handing the keys back. I the flats are selling for about 50k at the minute and I owe 72k on it. There is 40kbequity in my house but weíve tried to remortgage and been refused probably down to my debts. I want to hand the flat back and come to a payment plan. I would rather pay back what I owe and I want to protect my house. Will they let me pay it back for however many years it will take me?
    Originally posted by zak74

    Hi zak


    A mortgage shortfall debt (the amount you're left owing when the sale of a property did not cover the mortgage/secured loans) is considered a non priority debt because usually the worse case scenario is they might obtain a CCJ.


    It does sound likely bankruptcy is ruled out because your own home will be at risk, unless as earlier mentioned a third party can afford to buy out your interest.


    You can't give your debts what you haven't got, so you would simply end up offering your creditors the amount you can currently afford based on your statement of affairs (SOA). It is best to talk through all your options, and the implications of handing the keys back, with one of the free debt advice agencies first though. Good luck with it all.


    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • fatbelly
    • By fatbelly 11th Jan 18, 1:09 PM
    • 11,798 Posts
    • 8,892 Thanks
    fatbelly
    • #7
    • 11th Jan 18, 1:09 PM
    • #7
    • 11th Jan 18, 1:09 PM
    Mortgage shortfall debts are often settled for really low amounts (I've seen 10%) precisely because people in that situation are often considering bankruptcy.

    For you that's not an option but don't tell the flat's mortgage lender that.
    • zak74
    • By zak74 11th Jan 18, 4:40 PM
    • 21 Posts
    • 2 Thanks
    zak74
    • #8
    • 11th Jan 18, 4:40 PM
    • #8
    • 11th Jan 18, 4:40 PM
    I really don’t want to go bankrupt if I would lose my house. That isn’t an option. I want to voluntary surrender my flat to the mortgage company and if and when they sell it I would come to some arrangement about the shortfall. Do I need to make the mortgage lender aware I’m going to be doing this. I won’t be able to make this months mortgage payment due on the 28th. I’ve read people just send a letter and the keys back. Is this the right way to go? I have an appointment at CAB on Friday so hoping they will be able to advise
    • silvercar
    • By silvercar 11th Jan 18, 7:39 PM
    • 36,403 Posts
    • 153,892 Thanks
    silvercar
    • #9
    • 11th Jan 18, 7:39 PM
    • #9
    • 11th Jan 18, 7:39 PM
    That isn’t an option. I want to voluntary surrender my flat to the mortgage company and if and when they sell it I would come to some arrangement about the shortfall.
    Sounds reasonable.

    Do I need to make the mortgage lender aware I’m going to be doing this. I’ve read people just send a letter and the keys back.
    You would send the keys back to the mortgage lender, explaining that you are voluntarily surrendering the property. It would be courteous to let them know there are tenants in the property and your tenants that you have surrendered- the lender will take over the landlord duties in the short term and handle eviction.
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