Can I go bankrupt but keep the house?

diddabunce

I know this is a bit of a minefield.

Has anybody gone bankrupt but managed to keep there mortgaged home?

Just a bit of background.

I had a accident two years ago and was paralysed. (it caused loads of other health problems on top) I had to leave my very well paid job. My husband was made redundant 4 months ago. We are barely staying a float. Compensation will take a while, there is a possiblity that we may get an interim payment next year. But, that's a may-be.

I am currently paying £1.00 token payments to my creditors. But we keep being harrassed to try and pay more. We have a £1300 overdraft and nationwide say if we do not pay back more that £30 a month they will close our account. It seems that when ever we manage to get a bit of money together everybody wants a piece of it. I would love a clean slate. But, being in my situation is not easy.

I am not concerned about the house (no emotional attachment) it's just that it's been fully adapted (council grant) and the council have stated that they do not have a suitable property for us to go into. I would have to go into sheltered accommodation and my son and husband would have to go to a B&B.

Can anybody help?:A

Prudent

Could you get housing benefit to pay the mortgage interest payments? Would that free up money for other creditors?

diddabunce

Trying to sort that out but we have a £160k mortgage and it only covers upto £100k
We currently have insurance that is paying the mortgage. But we are still struggling. The overdraft is a big thing. DD are being returned unpaid (first time ever) We have no money. The bank will not take into account what has happened and that we are inline for substantial compensation. I hate being in the position. where everybody wants money that we just don't have.

It seems to be getting worse. I would gladly lose everything. But, its just the fact that i need an adapted bathroom.

Prudent

It might be worth setting up a separate basic bank account with no dd's. This will allow you to have more control over your payments. I am assuming the bank is maing a charge for returned dds.

diddabunce

I agree, i would love to not have a bank account either. But practically at this moment in time it's not an easy option. I can not get a new bank account.

Sky - want £4.00 extra to pay by cheque/at post office
N-Power - Want £4.00
BT - Want extra

I have internet shopping (can't make it round the shops) they do not take any forms of payment.

I do not want to lose the bank unless i go BR.

deedee_3

Ring up the Co-op and ask to open a cashminder account. You can have DD's, an Electron card, telephone and internet banking but no overdraft. That way you can get back control and make the OD you have another debt you can deal with later.

http://www.co-operativebank.co.uk/servlet/Satellite/1193206375355,CFSweb/Page/Bank

stevelinz

Does the house have any equity in it, If not then they may be a chance you can keep it. If there is money for the OR to release he/she will try to release that money by either someone buying your interest or selling. They do normally give you 12 months to move out so the if needed this will give the council time to rehouse you.

Good Luck

diddabunce

Thanks, i was literally just reading about a co-op account. I think that's a good way forward. How do I find out if we can keep the house? Or is it case of we wont know until we start?

Not sure if the house has any equity. In this current market probably not. We only bought the house in sept 2006 the accident happened Feb 2007.

A house the same as ours in the same road has just sold for £215k. Ours looks nicer so i was pretty shocked. But, ours has all disabled things done now. (not sure if that damages value)

deedee_3

So that leaves you with at least £40k equity with a £160k mortgage, which leaves your beneficial Interest at about £20k.

The OR may ask you if you would be interested in the BI at this time you could say no not at this time but maybe in a year. The OR will ask you again in the year and you can then get the house valued and if the BI has gone down then you pay less. If it has gone up then you will have to find more.

If you want to find out how much it would be worth then ask a couple of estate agents round to value it for a quick sale. You don't have to tell them why.

custard_cream_3

I suspect the way house prices are going, waiting a year might be a good option; one I'm likely to take.

In terms of carrying on the mortgage, I have a joint mortgage with my wife which is fixed until 2012. Does my wife have to remortgage before then on her own, or can it just carry on as it is providing payments are met?

diddabunce

thanks deedee

Just opened a bank account with co-op. That sorts the bank worry out. If the house is in negative does that look better for Bankruptcy?. Will they take my situation into account?