voluntary repossesion and bankruptcy

losing_it_all

Hi evereyone,
I am in need of some advice.
I live on my own with a mortgage which i can no longer afford to pay i am currently looking at voluntary repossesion and then filing for bankruptcy or vice versa which is the best way to do it with the least stress and quickest resoloution, also i have a debt in my name which has already been forwarded to a collection agency will this be taken into account with the bankruptcy,

thanks
losing it all

shadowdragon

Either way round is possible, if you stop paying the mortgage they will go for repossession, and you declare BC which means you can stay in the house until they effectivley evict you. or you can move out and hand the keys into the bank/BS find a new home and then declare BC, some do this so they pass the credit checks for the landlords, but they may not be happy with you being BC, again some have been upfront with the letting agents and have been fine (although some have paid six months rent in advance), some have not mentioned it to the LA.

Some people have kept there houses while BC because of neg equity too.

Theres lots of solutions, have you contacted one of the debt charities (CAB CCCS Nat debt line)? You need to talk to these people first really, they will explain your options ect.

losing_it_all

hi
if i went through the route of volutary reposession how long after do i file for bankruptcy?
sorry if i sound naive but i have spoke to national debt line twice today and got conflicting information!!!!

thanks

shadowdragon

whenever is convienient for you, there two different issues/entities you could walk into the bank tommorow and hand the keys back then pop into court and declare BC (if they did a dropin service). Its what works for you.

Can you expand and give some detail on what you asked nat debt and what the conflicting info was?

losing_it_all

when i spoke to nat debt this afternoon i was told that i could do a voluntary reposession and then file for bankruptcy stating that there would be a mortgage shortfall to ibe included, when i spoke to them later to go through the details thoroughly i spoke to another advisor who told me that if i filed for bankruptcy the mortgage shortfall would not be included in the debts.

shadowdragon

well the mortgage is a debt, which you had prior to declaring Bankruptcy. so the asset is the house the mortgage is secured against. If that asset is released to pay your creditors and sells less than the mortgage the short fall will be included in the BC

(well thats how I understand it, anyone else confirm I got this right please)

GettingHopeful

I am in the middle of various problems with vol repossession because I have had conflicting advice too, and the OR was in two minds as to whether the flat I had moved out of would be taken over by them as there was equity in it.

It now appears, nearly 4 months later, that I can go for vol repossesion possibily because values have reduced and equity nearly gone, but the BS will not allow me to vol repossess unless I get independent legal advice - again which has been conflicting. I am now awaiting further advice but am fairly desperate to have it repossessed as council tax, maintenance etc is causing me problems.

I would recommend that you consider repossessing first then it will be clear cut from the start. Speak to the BS and see what the scenario is with them.

My OR has at least confirmed that the mortgage shortfall will become and unsecured loan and will fall within the bankruptcy.

All the best, and I can go into more details if you want.

losing_it_all

thanks all for the great information but do you mean let it go to repossesion or voluntary repossesion?
and if there is possible equity in the property is the OR less likely to class it as a debt?
also if i volantary reposess who is liabel for the council tax and such?

thanks

shadowdragon

I think if you can keep up the mortgage repayments and theres equity in the house, the OR will want it (dependant on how much) but they usually leave it a year before selling/recouping it (as far as I am aware, not really 100% sure in the mortgage area). Again hopefully someone can confirm deny this.

GettingHopeful

If you let it go for BS compulsory repossession it will take about 3 - 4 months of arrears before the BS will do so. Voluntary repossession - as I understand from my experience - can be done without waiting, providing the BS agree to it.

The council tax then goes again to nil when repossessed and you are not responsible for it - kindly advised on this forum to one of my threads.

My problem was that I never got clear instructions from the OR as to whether they were going to take the property at the time of BR when there was possibly £25k equity in it. In my early conversations with the OR I was told to "hold on" whilst they discussed, but I never got a reply. I even put in writing but still no advice. Since then property values have reduced and outstanding payments have been added to the amount owed so that equity is virtually nil or very little.

Shortly after BR the property could have sold and cleared the mortgage, but the OR never authorised me to go ahead and ignored my requests about it.

The OR now tells me that it isn't down to them at all whether I voluntary repossess and seems to think I should know that - so it is all very confusing as both the CAB ( a relatively inexperienced advisor, not the excellent one I had before going BR) and the BS originally, said I had to have the OR's agreement before I surrendered the property. Then the BS changed their mind about the legal position, and said I didn't need the OR permission, but to get further independent legal advice before going for voluntary repossession. This I am waiting for now from one of the charities.

The BS have however said that they will sell for a reasonable price and will not take a silly offer. Any excess will go the OR and the OR has at least confirmed that any shortfall on sale will go into the bankruptcy estate.

I am sorry that I haven't any clearer advice - it just isn't as easy as I thought. As soon as I hear more I will post again. I would however recommend speaking to your BS as they are likely to have their own procedures.

neverdespairgirl

losing_it_all wrote: »

I live on my own with a mortgage which i can no longer afford to pay i am currently looking at voluntary repossesion

Is there enough equity in the place for you to do a quick sale? That would be better than repossession.