Urgent Help Needed

Richard_S

Hi Queen,

This is an email from the I.S. It's badly formatted, and I've removed the relevant names for obvious reasons, but it is unequivocal:

Thank you for your email today.


Please note that the Insolvency Enquiry Line of The Insolvency Service deals with general, not case specific, queries relating to insolvency, as it is not in full possession of the facts of each individual case and cannot provide advice, only information.


I can tell you in general terms that a debt that is secured by a
mortgage or a charge on a property is still a provable bankruptcy debt. The mortgage loan company is "a secured creditor" which means they have rights over an asset, the house, and can require the asset to be sold to pay their debt.


These rights are not affected by the bankruptcy. On the making of a bankruptcy order the mortgage loan company could make a claim in the proceedings but, unless it wished to give up the security, could only claim for any (estimated) shortfall.


If a bankrupt continues to live in the property it is likely that they will continue to make payments to the mortgage loan company to avoid the property being re-possessed. When the property is eventually sold any shortfall to the mortgage loan company is still a provable debt in the bankruptcy, even if the person has been discharged, as they are released from the debt on discharge. There is no time limit on this.

The bankruptcy of one joint owner does not affect the obligations of any other joint owner who has not been made bankrupt to repay the mortgage loan debt or any shortfall, as they are still liable for the whole of the debt.


After the date of the bankruptcy order the mortgage loan creditor may ask a bankrupt to sign a "deed of acknowledgment" of the outstanding debt. If the bankrupt signs such a deed the mortgage loan creditor can take action against them to recover any shortfall following the sale of the property.


Accordingly, if requested to provide such a deed, the bankrupt may wish to seek his/her own legal advice. The purchase of any beneficial interest would not affect the situation. I hope this is helpful.

Richard_S

Hi Queen,

The one thing you must not, under any circumstances do, is sign the "deed of acknowledgement".

This is a link to the I.S website, and the relevant section is at the end:


http://www.insolvency.gov.uk/faq/faq.htm#16

Our circumstances were somewhat complicated, and a former creditor, our ex business bankers, are trying to hold us liable under a complex guarantee and second charge arrangement. The second charge may well be secured, but our personal liabilty was a provable debt in bankruptcy.

I get the distinct feeling it may end up in Court, but if it does there's going to be some red faced (w)bankers, because I'm sure of my ground here.

Richard

Queen

Just to keep you all updated, I have had it confirmed today by insolvency.gov that if we go BR and do not buy the BI then any shortfall would be included even if it was 20yrs down the line, if we purchased BI then this would not be included, so I think we will have to take the plunge and go BR with BI just in case could anyone advise if this is the correct thing to do or not.

blind-as-a-bat_2

So they have confirmed the exact opposite to what they confirmed to Rich no suprise there then:rolleyes:

Can i just ask how you got it 'confirmed' was it by email or phone?

Richard_S

Hi Queen,

My understanding is that purchasing the B.I doesn't affect the situation. I can't be 100% certain, because I've never heard from anybody who's actually proved this in Court, and the regulations don't seem to explain the situation with any degree of clarity.

I'm basing my assumptions on the email from the I.S that's quoted above, and some understanding of the law as it's applied in these circumstances. It just doesn't seem rational to me that purchasing a B.I in a property should make you liable for any debts that are provable in a bankruptcy. To me, it's the same theory as purchasing shares in a company; your only liabilty to the company's creditors is the value of those shares.

If I hear anything to the contrary I'll certainly post whatever information I have.

Debt doctor may well have an opinion on this subject; if he doesn't show up by the weekend I'll send him a P.M.

Regards

Richard

Rylynn

Goodness I sympathise with you Queen this seems like a total nightmare situation. I hope you get it sorted out and find peace of mind soon.

I thank my lucky stars I do not own my house.

sandywindsor

Hi Queen,
when OR took ownership of my property I refused BI, paying £1200 per month plus arrears seemed not sensible!
The woolwich (1st secured) contacted me ref arrears and payments 9asking £86 per month) advised I was no longer the owner....reply to say they would contact OR and keep me in formed that was 4 weeks ago..heard nothing.
since then secured loan (2nd name) talking reposs....told to contact OR...no further contact.

Sandy

Richard_S

blind-as-a-bat wrote: »

So they have confirmed the exact opposite to what they confirmed to Rich no suprise there then:rolleyes:

Can i just ask how you got it 'confirmed' was it by email or phone?

Hi Bat,

In that email I quoted, the first response from the I.S was that purchasing the B.I did make the bankrupt liable for any shortfall, but when that was queried there was an apology, and a confirmation that after consulting with their legal team, that indeed it did not change the situation by having purchased the B.I.

As you know, we may well be getting to the point of proving that in Court in the not too distant future. I appreciate that doesn't help Queen at the moment, but as we've proved over almost 2.5 years, taking legal advice on a complicated issue doesn't always result in unequivocal advice.

Probably Queen's best approach is not to purchase the B.I until such time as she/he can be 100% certain. For sure, there's no pressure from the O.R to purchase the B.I so Queen does have time on her/his side.

Oh dear, when did we lose the perfection of something being black or white, as opposed to a murky shade of grey? Or should that be gray?:rolleyes: :rolleyes: Or is that just the colour of my hair?:eek: What's left of it.:eek: :eek:

Rich

Queen

Thanks for all your info after speaking with my boss I work in financial services he doesn't see the point in buying the BI if its restricts shortfall going into BR as he thinks it will take longer that 3 yrs for the economy to get back to were it was if it ever will, but as you said that if 12 months down the line things start to change I can always purchase it then.

Many Thanks again xxxxxxxxxxx

We just need somebody who has been through this exact predicament to confirm this or again do you thinks it changes from OR ro OR.

Queen

May need to move BR appt tom end of Nov, this is due to tax refund that my OH will receive over the next 3/4 weeks also that we can save for fees do you think its likely that Shoosmiths with get an application into court and dealt with in that time or is it best just to do it on the 05th I understand if we do it earlier the any tax that we don't pay goes to the OR