Vol Repo/Private renting?????

everdecreasingcircles_2

I dont know which way to turn, myself and my partner have been advised to go BR by CCCS. My dilemma now is whether to go BR in current home with interest only mortgage and secured loan plus negative equity or to rent somewhere privately, thus saving £500 per month and then go BR??
Probably a daft question given the monthly saving we'd make but it just seems so scary to give up the security of our own home and put the neighbours through several months of hell no doubt until the house was repossessed, and we have three children in tow!

Any assistance much appreciated!!

kgreen84

I am in exactly the same position (interest only which we can't afford and negative equity) we have stopped paying everything to save for renting. I would advise to check with letting agents as some won't allow bankrupts while others want 6mths upfront. Its unlikely you'd get away with not telling them as I think the OR writes to them. Another option is private as alot of them aren't bothered as long as you pay but do check the tenancy agreement 1st (this is the option we are taking).

TBH tho' everybody is different and what is right for us might not be right for others, have you called national debtline or CAB etc? We found them very helpful. Knowledge is the most powerful tool in this situation!

Good luck whatever path you decide to take.
xx

everdecreasingcircles_2

Thanks, its comforting to know theres someone in more or less the same position. We've found a rental we like not too far away from where we are now so kids can still go to same schools etc and we appear to have made it through the LA checks. I've spoken to the LL himself and explained our situation and he has no problem with it and says he's only employed LA to find tenants then hes going to manage property himself, so hopefully things will work out! Hope it does for you too xx

dalip

That sounds really positive. Good luck with it all.DX

MammaCas

Hello there

Just to add - I was in exactly the same position a year ago. Interest only, negative equity, monthly payments had just gone up to £1500....We stopped paying everything in Dec 07 and moved into rented Feb 08. We went BR March 08.

I know what you mean about the 'security' of your own home - but if you are on interest only and in negative equity, you are 'effectively' renting. We managed to rent a house for £575 per month, in a better area.

I cannot tell you the relief once we'd moved. And it doesn't really matter what the neighbours think - it's your happiness, health and well being that are most important.

The only other thing to add really is to keep posting on here, keep speaking to the CCCS and good luck for the future.

Take care

MC x

everdecreasingcircles_2

You lot are brilliant, I know I wouldnt have the courage to do it without all the support and brilliant info I've found on here.

Thanks so much xx

RichOneday_2

Using recent revelations from the IS as a guideline, you also have the option of:

1. Staying put and including the mortgage in your I & E.

The £500 pm monthly savings are not real because these will become a surplus in your bankruptcy calculation and you will pay at least 50% of that amount for 3 years. Ouch. £9,000 to the IPA.

Once through the bankruptcy either pay an equivalent of what you would have paid in rent (or a little less), this will have the effect of putting the ultimate repossession off for quite a long time, or paying nothing and saving for your rental payments from day one. This will keep the house occupied and not be so bad for the nieighbours, unless they don't like you of course. The repossession will then happen in 6-8 months approx.

The important new discovery is that the shortfall on the house sale suffered by the lender will still be covered by the bankruptcy even in 5 year's time. On the other hand, if prices have miraculously recovered and your BR has been discharged you will keep any surplus after repossession.

Financially, you are going to better off staying put and going BR with the mortgage in the calculation. Your outgoings after bankruptcy need be no different either way, but that £9,000 IPA is worth avoiding.

As for finding another property to rent at a later date, there will always be landlords who understand bankruptcy and see it as a positive. A debt free tenant - what could be better?

everdecreasingcircles_2

Thanks Richoneday! I guess we're very lucky to have options but it does make it more confusing. Basically our situation is this:-

Monthly income: £3192
Mortgage: £645
Secured Loan: £571
Other allowable expenditure: £2206 based on family of 5, 2 cars

= Deficit of £230 per month, although this includes £100 pm towards holiday, £150 pm clothing and £80 household repair costs.

versus
renting slightly larger house for £700pm

where surplus approx £206pm, therefore assuming an IPA of £103pm

PS negative equity on house is approx -£23k at the moment.

Still dont know what to do for the best. What do you suggest??

M

RichOneday_2

When you say 'other allowable expenses' can you clarify allowable in what sense?

It looks like a very large amount to be allowable for an ORs calculation and holidays would not be allowable, clothes about £12pm per person I think. This is the IS guide on how they calculate the IPA, which you may already have seen:

http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/ipoipa.pdf

The calculation of the IPA is likely to be the key factor in your circumstances, so it would be good to get a few people's opinions of what they think it would be.

everdecreasingcircles_2

Our other `allowable' expenses are:-

Household Repairs £80
House Insurance £35
O/H sia license £15
Car Insurance £55 - 2 cars
Council Tax £125
Water £45
Gas/Elec £150
Public Transport £80
Life Insurance £24
TV License £11
BT £11
Groceries £550
Appliance Insurance £10
Mobiles £70 - 2mobiles
Dog Insurance £15
Petrol £300 - 2cars
Childcare £30
Kids Pocket Money £30
Holiday £100
Car Tax/Repairs £40
Kids Education £30
RAC £12
Clothing £150 - Both need suits for work
Dentists/prescriptions £30
Kids activities - £55 - 3 children
Dry Cleaning £15
Meals at work £35
Haircuts - £25
Internet Connection - £15 - needed for work
School Meals - £63

Total £2206 I think??

RichOneday_2

Gosh!

A big family means big expenses so you will be able to argue/discuss a lot of what you've listed. The pet insurance is not going to be allowed though I'm fairly sure.

What about the cars? Values in excess of £2k? On HP?

I think you're going to get the OR going through this with a fine toothcomb to be honest because it does look a lot.

So lets see what others think who might have had a similar size expense list.