Owners handing in the keys

ailuro2

I pad a mortgage of 14 point something percent back in the early nineties, so it could not have been far off!:p

Dithering_Dad

!!!!!!? wrote: »

If you're in negative equity, still have a job and have demonstrated a good payment record on the mortgage you might even be able to keep the house should you go bankrupt. It's not in the lender's interest to repossess on a bankrupt if they know the house will make a loss when sold, as they will lose that money and since there's no equity in it the Official Receiver has no interest in taking it. Plus paying the mortgage will be easier to do when all the unsecured debts are wiped.


I think that a lot of people are going to be taking the bankruptcy route and that it will as a consequence be made considerably harder to do so and/or have more repercussions on the individual. As in, no credit of any kind for a decade. That sort of thing.

Credit records only go back 6 years, so a bankruptcy is expunged from your credit records after 6 years, not a decade. People can even start getting credit much earlier if they repair their credit rating (information on this in the DFW/BR forums).

Even if you have equity in your home you can still keep your house when you go BR, you simply get a friend or member of you family to buy the equity from the official receiver. Once back on their feet, the BR can then repay their friend/family and take back the equity.

hethmar

Thanks ailuro, I didnt think I was going completely senile as yet I remember it rather well because we were actually in the middle of moving and our first buyer dropped out and there we were with two houses and this massive interest rate. Luckily the house sold quickly again but it was a hair raising time. It was defo 1991.

Ah, baby boomer has amended his post I dare say we had a fix then at that time.

"They were 15% in 1989". Well, may be by the early nineties people could no longer struggle on? But whatever the nit picking, the fact is, people now dont have that sort of burden.

Trollfever

Information from the Official Receiver on what will happen to your home can be found here:

http://www.insolvency.gov.uk/guidanceleaflets/guides.htm#1

.

baby_boomer

Sorry guys. I've just checked and you're right.

Rates at the end of 1989 were 15%.

I was getting confused with Black Wednesday 1992 when the rates went up suddenly for just a couple of days before falling rapidly afterwards.

It is an oft repeated myth that they went up to 15% on Black Wednesday, and this comment from William Keegan makes clear that they didn't.

Guardian

"....Last week [during the 2005 election campaign] the airwaves were replete with references to a rise in interest rates to 15 per cent on Black Wednesday. It never happened. What happened was that rates were first raised from an already crippling 10 per cent to 12 per cent (in a vain effort to prop up the pound) and later it was announced that they would rise to 15 per cent the next day. But that same evening, the game was up and the towel thrown in..."

WTF?_2

hethmar wrote: »

Yes, this happened in our street in the early 90s BUT have to say at that point the interest rate was 15% and the people just couldnt manage to pay their mortgages. Surely at the moment people dont have that burden of high interest so I cant understand why they would have to do it?

Because there are two components to your debts: The capital debt and the interest payable on that capital.

We seem to have increasingly being living in a world where a large amount of capital debt was taken as a given for the average person, so people only thought about interest repayments when it came to evaluating their debt. Many people seemed to take it for granted that the capital wouldn't need to be repaid any time soon and cheap credit would be perpetually extended as long as they met interest repayments. Well, that little illusion is about to be shattered.

If you have a large capital debt then even low interest rates can leave you with as much problems repaying as 15% interest rates did back in the 80s.

These days a typical FTB from the last few years would be expected to be carrying maybe in excess of 100k of mortgage debt (plus quite likely a fair few thousand quid in expensive unsecured debt too). A decade ago that would have been more like 45k with relatively little additional unsecured debt. Big difference.

If only those cretins in the central banks had actually increased interest rates when they should have, during the boom, it would have prevented so many people from taking on huge amounts of capital debt. Instead, they left them too low and people took on monstrous amounts of debt under the mistaken illusion that it would always be cheap and easy to refinance.

hethmar

We only ever had fixed rates after that time. I dare say some years we paid over the odds but I couldnt face the uncertainty of rates shooting up like that again.

I guess for a lot of younger people they didnt have the memory of times when the rates could be so high. As !!!!!! says, why in gods name didnt the banks/governments see what was going to happen it was so obvious to anyone with half a brain.

WTF?_2

Gorgeous_George wrote: »

Self respect?

GG

Bankruptcy is part of the game. Lenders should bear that in mind when loaning out stupid amounts of money to people patently unlikely to pay it all back.

neverdespairgirl

mystic_trev wrote: »

Let's face it if your stuffed with a large mortgage in negative equity, and are struggling to pay it, why not? Add to that all your credit card debt, you may as well go Bankrupt and have the 'slate wiped clean' in a year, by which time you'll probably be able to rent cheaper than your previous mortgage payment.

It's not quite a year, though.

Bankruptcy lasts a year, then automatic discharge kicks in (assuming you co-operate with the Official Receiver). Early discharge happens sometimes as well.

But if you have an IPA / IPO, you have to pay your creditors via the OR for 3 years.

neverdespairgirl

mystic_trev wrote: »

Sorry BB - Didn't see this and have started another thread - apologise! Great minds and all that!

Or, "fools seldom differ...."?