equity

guineacat

if my daughter sells her house at the cost of the mortgage ie comes away with no money from the sale at all. but is left with £80,000 of debt from elsewhere and so declares herself bankrupt will the fact that she has sold the house with no profit be classed as disposing of ones assets?

skylight

No. PROVIDED that she sells for a true market value and not at any price below what its worth - ie. valued at £100k but sells to relative for £70k etc.

Its not an asset in this case if there is no equity - there is nothing to withdraw an asset (£) from. BUT does she really want to sell? Does she have mortgage arrears or secured debts on the property? Bankruptcy does not always mean the home is lost if you are upto date on payments and can continue to pay them AND there is not equity. Property and BR is a minefield - she should chat to CCCS or Payplan (one of the FREE debt charities) to clarify matters.

guineacat

she already has an IVA set up with payplan and is arrears with her mortgage

k2nga

I would talk to the charities but if i was you i would just let the house be dealt with as part of the BR as otherwise you will be paying fees on the house sale and the like for no reason at all. Also you might want to check if she needs to get a certificate from Payplan in order to go BR as there had been times when people cannot go BR without it.

guineacat

if the house is part of the BR will this be a reposession type thing that will go against them in the future if they wanted to buy again

shadowdragon

the bankruptcy will go agains them anyway, I doubt the fact the house was repossed by BR will make any difference. As long as once they are discharged it appears on there credit file as "Settled" it wont make any difference as far as I am aware.

skylight

Depends how far in the future they are looking at Guineacat. BR stays on file for 6 years and even after that, most mortgage companies will ask if you have ever been made BR - so even in 20 years time you have to answer yes. Repossession and BR are as bad as each other in the credit world. Neither is worse than the other. With the passing of time, effects of both become less severe (ie harsh interest rates if they wanted to buy again in a few years would become a usual rate after 8 years or so for example etc). Its going to take years for them to re-save a deposit anyway.

shadowdragon

hmmm...I took vol repo on a property in 1998-1999, and I took out another mortgage in 2004 I told the Financial Advisor about it and they said "Well we wont approach that lender for a mortgage then". I didnt have a problem borrowing 150k from another lender and at a normal interest rate.

peachyprice

guineacat wrote: »

if the house is part of the BR will this be a reposession type thing that will go against them in the future if they wanted to buy again

If there's no equity in the house the OR will not deal with it, she will have to sort the voluntary repossession out herself with the mortgage company.

She can however, include any shortfall after repo in her bankruptcy.

tigerfeet2006

Definatly ring one of the debt charities and get her to talk through her options with them. Their numbers and links are in my signature.