Voluntary repossession - help

eboy1975

Have some repo questions, if anybody could answer them;

What are the consequences of voluntarily repossession as i'm seriously considering it.

How is the deficit repaid (am in neg equity and have a first plus secured on top of that) - not bothered about losing home and know that credit will be hard to come by (thank god!)

fixed rate goes up by 350 p/m in sept and am wondering whether to stop paying mtg and secured loan.

Also have two BTL's, one is up for sale and would be looking to equity of approx 10-15k to reduce repo debt balance - or could stop paying the mtg on this one as well (would save 1700 p/m in total).

Can NR and first plus force me into bankruptcy?

thank you

wanttomove

you would still be responsible for the deficit as I think your mortgage provider can still come to you for 10years after reposession for the balance of what your property sold for and wht you owed on your oustanding mortgage, which remember if you stopped paying would actually increase due to fees, interest etc

CLAPTON

You will still be responsible for paying any deficit after repossesssion

It's usually better to try to sell the house rather than allow respossession because you usually get a better price selling than allowing the lenders to auction it off.
However as you're in negative equity you would need to seek the agreement of NR and First Plus.

They rarely seek bankruptcy unless you have other assets... you say you have two BTL properties... whats there total equity?

eboy1975

BTL1 - approx 10-15k (which is up for sale)

BTL2 - approx 30k (which relative resides in and would only sell as an absolute last resort)

Have spoken to NR & 1st Plus on the residential - NR will allow us to refinance deficit on an unsecured basis only if 1st Plus agree to sale (which having spoken to them they are unlikely to agree to unless we can pay back 60% of o/s balance - 25k).

Seems an impossible situation to get out of which is why I am considering a volunatry repo and agree to pay back £x p/m through a court order.

If they could force me to go bankrupt that would mean having to sell BTL2 (purchased from m-in-law 2 yrs ago before her husband passed away).

I know that i couldn't walk away from repo debt and am not suggesting that i am trying to do this but finding things difficult to sort in my head at mo.

CLAPTON

it would be easier to see the situation if you posted up the full figures
i.e. realistic house value
mortgage
secured loan

and how realistic is the equity (10k - 15k ) in the first BLT bearing in mind the present state of the housing market... it it under offer?

The risk of voluntary repossessions, as well as getting a lower price is that they will insist the second BTL is sold too.

eboy1975

Statement of Account;



Monthly Income Details
Monthly income after tax................ 2034
Partners monthly income after tax....... 1250
Benefits................................ 60
Other income............................ 0
Total monthly income.................... 3344

Monthly Expense Details
Mortgage................................ 1700
Secured loan repayments................. 405
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 10
Mobile phone............................ 30
TV Licence.............................. 10
Satellite/Cable TV...................... 21
Internet Services....................... 20
Groceries etc. ......................... 400
Clothing................................ 50
Petrol/diesel........................... 110
Road tax................................ 21
Car Insurance........................... 43
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 25
Contents insurance...................... 0
Life assurance ......................... 83
Other insurance......................... 45
Presents (birthday, christmas etc)...... 40
Haircuts................................ 20
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3223

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 2000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 158500...(1700).....7.59 (includes x2 BTL payments)
Secured Debt.................. 38000....(405)......12
BTL2 mtg.......................62000.....-.........5.5 (equity approx 30k)
BTL mtg........................71500.....-.........7.59 (equity approx 10-15k - cuurently on market)
Total secured debts........... 330000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
loan...........................7500......201.......6.5
c/cards........................9000......300.......0
Total unsecured debts..........16500.....501.......-

Monthly Budget Summary
Total monthly income.................... 3,344
Expenses (including secured debts)....... 3,223
Available for debt repayments........... 121
Monthly UNsecured debt repayments....... 501
Surplus(deficit if negative)............ -380

Personal Balance Sheet Summary
Total assets (things you own)........... 2,000
Total Secured debt...................... -330,000
Total Unsecured debt.................... -16,500
Net Assets.............................. -344,500

CLAPTON

just to clarify

what is the value of the house?

do either of the BTL produce rental income?

is the family two adults and one child?

eboy1975

Residential £150k

BTL1 - self sufficient for 2 yrs. Just gone onto svr with NR, have moved tenants out and put up for sale

BTL2 - covering mtg payments at mo (technically not BTL as m-in-law resides in it - but about to start process of applying for hosing benefit to pay rent (to us))

2 adults & 1 child

CLAPTON

I can't see any way that you can realistically retain equity in a buy to let while defaulting on the main home.

If you sell all three; although you will end up with a deficit of up to 10k it seems to be manageable given your income.
Obviously the situation with first plus would have to be resolved .. but if the alternative was for you to default on the loan then they may well agree to allow the house to be sold.

The alternative approach is to stay in the house, sell the BTLs and default on the unsecured debt ... I can't quite work out the net effect on your cash flow as there is not a detailed breakdown of the mortgages but i would think this would be feasible.

I would suggest you try contacting national hlep line, CCCS or Payplan and see what suggestions they can come up with.

eboy1975

' I can't quite work out the net effect on your cash flow as there is not a detailed breakdown of the mortgages but i would think this would be feasible.'

Residential - mtg 158k (950p/m in sept) plus sec loan of 38k (400 p/m)

BTL1 - mtg 72k - approx value 85-87k - up for sale (450 p/m)

BTL2 - mtg 62k - approx value 90k (300 p/m) (as stated before m-in-law resides after selling to us in sept 06 - looking to 'charge' her rent through housing benefit asap - if possible this would help enormously)

Merlot

Voluntary repo is rarely a good thing, and in your case certainly not, you are going to have to sell the second BTL, you have very little option.