Does reposession always = bankruptcy?

Enoughsenough_3

Hi everyone,

I'm still trying to work out my best plan of action and have a question around reposession. If my husband and I split up and I leave, the problem is that he’s not creditworthy/earning enough to take on the mortgage solely. I can’t afford to stay there on my own, so it’s a bit of a stalemate situation.

If we voluntary reposess – or even involuntarily get repossessed – does that automatically mean I’ll have to go bankrupt? Selling quickly isn’t an option in the current climate – the house needs a lot of work and wouldn’t be desirable even if the market was buoyant! I’m just wondering if there’s a way to get rid of the house without having to go down the BR route. The crazy thing is that I actually earn ok money – I just can’t afford to stay there on my own and cover the mortgage/loans/bills/other debts.

Cheers
EE

peachyprice

I take it you're in negative equity?
The shortfall would become an unsecured loan once you were reposessed. You may be able to negotiate a favorable rate with the lender to cover this, if you don't make arrangements they will pursue you through the courts, same as any other unsecured lender.

GettingHopeful

It doesn't necessarily mean BR if repossessed or voluntarily repossessed unless as Peachy (who always gives brilliant advice, thanks Peachy) there is a shortfall on the eventual sale which you can't cover and may drive towards bankruptcy.

I have discovered that the whole repossession thing is a minefield with the Building Soicety, the Insolvency Service and the CAB all giving conflicting advice, and have come to realise that the most practical is usually to be found on this forum.

BUT everyone's situation is different and you do need independent legal advice - as I have been informed by my BS today. I really want to vol repossess, but the BS will not let me do so, unless I get independent legal advise. Certainly, the various parties are acting as if I am missing something, so I intend to get it.

These are the sources the BS suggested today for me - not necessarily debt advice, but legal advice:

Community legal service: https://www.justask.org.uk
National Debt Line - no should be on this forum somewhere
And two further telephone nos, but I can't read my writing so will let you know when I have rung them, who they are.

I'll also post what they say to me, but might be a couple of days as have spent a long time today on the problem.

Enoughsenough_3

Thanks so much guys! Particularly Getting Hopeful. It sounds like you're in a similar situation so I'd really appreciate hearing what they tell you.

I'm not sure we'd be in negative equity. I've spoken to a local estate agent and they said that prices in our area are still just a bit above where they were when we bought (3 years ago next month). So she seemed to think it was worth at least what we paid for it. So I know it seems crazy to think about just handing the keys back, but the problem is that when we split neither of us can afford to take on the mortgage ourselves. And I guess agreeing to keep my name on a mortgage that I'm no longer paying/living in is quite a risky situation to put myself in!

The added complication is that we have a secured loan on the property of around £25k. What would happen to this? If the BS managed to clear the mortgage with the sale, would the secured lender agree to shift the loan to an unsecured one do you think?

Oh it all seems far too complicated :-( I wish OH could just stay there and cover the mortgage. Which he could, technically, from a monthly payments pov - but he'd not creditworthy enough for the mortgage to be shifted to his name (and he's self employed so can't demonstrate a large enough/regular income).

Anyway, if you could keep me posted with the advice you get that would be fantastic :-)

Thanks everyone
Pamela

Sunk

It was many years following repossession that I went BR.
I came to an arrangement at the time & paid as little as £10.00 per month.

Enoughsenough_3

oh really? Who was the arrangement with? Your BS? Was that to clear the shortfall?

I guess in the current climate lenders might be pleased to get what they can rather than nothing? Or is that wishful thinking? ;-)

Ee

peachyprice

If there's unlikely to be enough equity to cover the mortgage and secured loan the loan people will block the sale until you've made arrangements for the shortfall, which usually means converting it to a personal loan.

Sunk

Enoughsenough wrote: »

oh really? Who was the arrangement with? Your BS? Was that to clear the shortfall?

I guess in the current climate lenders might be pleased to get what they can rather than nothing? Or is that wishful thinking? ;-)

Ee

I was passed over to a debt collection agency & we came to an arrangement.
Yes it was to clear the shortfall.
The amount I paid did not cover the BS agency fees.

flowergirlgush

i am in similar situation and have just had the eviction date for repossession on a property which was the marital home. I have not signed any paperwork or handed the keys back but have just let them get on with it through the courts. I too have a secured loan so once the house sells any shortfall and the secured loan will become unsecured. If i am lucky there wont be much of a shortfall so i am hoping that i can avoid bankruptcy. It all depends on the debt thats leftover. I dont see the point of declaring myself bankrupt at the moment as it would be a pointless and costly exercise if my house sale clears its debts. My advice would be to see what the debt actually is after the house is taken and sold before you make any decisions on bankruptcy. You may be able to come to some arrangement for the balance.

Enoughsenough_3

Thanks Flowergirl that's really interesting. So are you still living in the house? Or is your OH? Did you stop paying the mortgage? if so, when? sorry for all the questions lol!! I'm just not sure what to do - is it best to move out into rented and then stop paying the bills?

EE