negative equity, bought a lemon, now working over seas

dannyboycey

Dithering_Dad wrote: »

I do sincerely believe that a lot of the pro-crash MSE posters are trying their absolute best to talk down the market. They need to remember that while MSE is a large website, not everyone in the UK reads it and not everyone even on MSE comes into the housing boards. [strike]You[/strike] Individuals cant affect the market by talking it down on MSE, they just make people in difficulties more depressed.

The housing market was inflated to ridiculous levels as a result of irresponsible lending and borrowing over the course of a decade, fuelled primarily by greed. House prices rose at a far greater rate than wage inflation - anyone with even a modicum of common sense should have realised that there is a point in this process at which house prices become unaffordable to the average person. It was completely inevitable. No amount of talking up or down on this forum will make the slightest bit of difference to house prices. There are far greater forces at work in the world economy than the MSE website.

GDB2222

Dithering_Dad wrote: »

As far as millstones - the chap had decided to rent his place anyway. If he continues to rent it out then eventually the market will turn and his neg. equ. will vanish.

You cant recommend bankruptcy to solve all of life's financial problems. What if the guy has other savings, assets or belongings. He'll lose everything if he gets declared bankrupt - even his job in some cases. Absolute mad idea. I suggest you pop into the bankruptcy sub board on the DFW and ask those guys if it's an easy option. I'd look forward to seeing the replies.

I was assuming that the OP had no significant other assets. I think that someone with good earnings prospects, living in another country might have a less torrid time of it in bankruptcy, but you're right - I've never been through it.

From a financial point of view, though, it looks a better deal than the route he has chosen:
After discharge, it sounds as though the OP can save something like £30k in a few years. 5 years after the bankruptcy has been discharged the OP should be credit-worthy enough to get a new mortgage - possibly with a guarantee from Mum + Dad. Assuming that the OP buys a similar house to the one he has at the moment for say £80k (we can argue about whether that is realistic or not), he will end up with the house plus a mortgage of £50k. On the route he has chosen, he will end up with the house plus a mortgage of around £90k.

However traumatic bankruptcy might be, it might be worth it for £40k.

Snooze

Anyway, enough about all that...

More importantly, did you enjoy the lemon you bought?

Rob

phil_b_2

GDB2222 wrote: »

5 years after the bankruptcy has been discharged the OP should be credit-worthy enough to get a new mortgage

Are you really sure about that? 5 years doesnt seem very long to forget that someone collapsed financially when considering handing over a load of money for them to buy a house. It seems to me someone who went bankrupt will appear a massive risk to any lender = huge rubbish interest rates etc.

Dithering_Dad

phil_b wrote: »

Are you really sure about that? 5 years doesnt seem very long to forget that someone collapsed financially when considering handing over a load of money for them to buy a house. It seems to me someone who went bankrupt will appear a massive risk to any lender = huge rubbish interest rates etc.

From what I've read of the DFW boards, your credit record only keeps 6 years worth of information on there, so 6 yrs after going bankrupt it's as though it never happened.

There are even threads on the DFW that tell you how to repair your credit record, immediately after being discharched. Usually by starting off with a basic bank account, then pre-pay debit cards.

I'm not sure about mortgage equity though, there may be a caveat to prevent people from just giving back their keys and declaring bankruptcy. I do know that it takes 12 years before a mortgage debt is statute limited (unlike all other debts that are statute barred after 6 years).

GDB2222

Dithering_Dad wrote: »

I'm not sure about mortgage equity though, there may be a caveat to prevent people from just giving back their keys and declaring bankruptcy. I do know that it takes 12 years before a mortgage debt is statute limited (unlike all other debts that are statute barred after 6 years).

Have a look here:
http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/guidetobankruptcy.pdf

There are a few debts that survive bankruptcy, but mortgage debt is not one of them.

Dithering_Dad

GDB2222 wrote: »

Have a look here:
http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/guidetobankruptcy.pdf

There are a few debts that survive bankruptcy, but mortgage debt is not one of them.

Really informative, thanks for that. It was interesting to see that you can keep your house even after being made bankrupt as long as you can get a family member to 'buy' any equity that's in your house. I couldn't see what would happen if you had negative equity.

Also of interest is that pensions are completely untouchable if you're made bankrupt. So much for having your retirement money in ISAs or property!

Makes you wonder why more of the DFWs, especially those who rent, don't go BR.

blahbob

Hi all, I cant be bankrupt, ever, period (!!!!!!, bankrupt!! as progress??). FYI The tax situation is remarkably simple and went in my favor so 'yay'. Basically I get taxed on my Belgian income in Belgium and taxed on my UK income in UK. I also get UK mortgage tax relief as a deductible expense on my UK property.

keeprenting

blahbob wrote: »

Hi all, I cant be bankrupt, ever, period (!!!!!!, bankrupt!! as progress??). FYI The tax situation is remarkably simple and went in my favor so 'yay'. Basically I get taxed on my Belgian income in Belgium and taxed on my UK income in UK. I also get UK mortgage tax relief as a deductible expense on my UK property.

But your interest costs exceed your rental income - can you set the excess against your Belgian employment income?

Did you ask whether a loss on your UK property could be set against your Belgian employment income for tax purposes? I'd guess probably not, but it's possible to set capital losses against income in some jurisdictions...

blahbob

I think it pretty unlikely, that would open the doors to all sorts of weired and wonderful schemes.The best way to stop making a loss on my rent income is to find 40K from somewhere.