Bankruptcy query?

ameratsu

What happens in bankruptcy when you have a large amount of equity in your home?
From most of the posts on here, people seem to have no or even negative equity which means they are able to keep their house by buying the BI.
If we are no better financially in 12 months time then BR's a (hopefully slim) possibility , but we have approx £50k of equity - remortgaging isn't an option as we are in a fixed deal till 2010 and at the moment have a severely reduced income ( over £800 per month less than before) and so a £90k mortgage would never be approved.
Is it a case of the OR forcing a sale by an auction?
We have unsecured debts of £22k - Our mortgage (20 more years) is £70k - house value approx. £120k - houses in our avenue rarely come up for sale and the house next door but one sold for £120k in 2006. A house in the next street has just sold but I don't know what it went for, it was only on the market for a short time as we live in one of the cheapest areas.
We've been here for 12 years but only bought the house outright 3 years ago as it was shared ownership, it was valued at the time at £110k.

I'm trying to look at every possible outcome and although I'm probably worrying unnecessarily, I have to know and plan for the worst.

skylight

It depends on the actual equity. Bear in mind that due to the "credit crunch" it may not be worth as much as you think - less selling fees etc, it does bring down the equity value.

It also depends on who is on the deeds and who is going BR. EG - if you and wife are going BR and you are both on the deeds, then the house is likely to be sold depending on the agreed equity amount (if lots). If one is going BR, both on deeds then the person who is not going BR is given the opportunity to purchase the beneficial interest in the BR person share of the equity (share being 50% if 2 on deeds etc).

If you are willing to keep the property and the OR allows this - you must keep up the mortgage AND all secured debts on it. Work out interest rate rises over time etc and have a long think about it. BR does not necessarily mean losing or keeping your home but BR and property is definitely a minefield. Have you had a chat with one of the debt charities?? Payplan or CCCS are a good start (links at the top of the BR board)

RichOneday_2

I agree with Skylight, you will not get any definite answers because there are so many ifs and buts.

However, in your circumstances, surely a less worse option than bankruptcy would be selling, clearing all your debts and renting until you get back on your feet.

You look as though you have a positive net worth so bankruptcy should not be considered under any circumstances.

Just my thoughts, but you could go in to rented property with £15-20k in your pockets or you can go in to rented property, bankrupt with nothing as a forced sale would wipe out most, if not all, of the equity.

ameratsu

Thank you, it's obviously a hugely complicated issue.
BR would be an absolute last resort, hubby's family could help us out to a large extent and my first thought would be to go for a DMP if need be - selling our home would be a long way down the line, preferable only to BR -
I saw what it did to my sister, she had to sell the house she was born in when her husband of 25 years upped and left.
I'd just like to know all the angles.

fiveyearplan

WHy don't you give CCCS or National Debtline a ring.

tigerfeet2006

Agree with 5YP get some proffesional advise asap.

Links and numbers in my signature.