Negative Equity

aproblemshared

If your property is in negative equity how do the secured lenders stand if you go bankrupt.

I have a house purchased 2 years ago height of property prices. Only put down a small deposit so its now in negative equity on an interest only morgage. If I go bankrupt what happens to the large secured loan I have on the house?

1bigmess

Hiya,

sorry to be the bearer of less than good news, but as far as I am aware, BR does not affect secured loans. They will still be there and need paying otherwise the lender may take action to reposses your home.

Not a great situation, but one I am also in and battling against.

Hope that helps and if I am wrong I'm sure someone will be along to correct me soon.

JCS1

Mortgages/Secured Loans are not included in BR, unless you hand keys back/get repossessed.

deedee_3

If you want to stay in the house then you will have to pay the mortgage and any secured loans on it. Would you be able to afford to do this if you have no debts? Though if this is quite a big payment the OR may suggest you move into rental accomodation if it is considrablly cheaper and go for reposetion of the house, where upon when it is sold the mortgage shortfall and secured loan is included in your bankruptcy.

So_Sad_Angel

Hi APS & Welcome,

If you do have property repossessed /or voluntary surrender then the shortfall (presumably most of which will be sec lender anyway) will fall into bankruptcy so long as you include the debt in your BR petition. This is because upon sale the shortfall goes from secured to unsecured. Get advice from the debt charities.

I am in similar situation. My mtge lender will be covered but the SL (Picture) will get virtually nothing after recent fall in property values!!!

There are many in your situation & the lenders are much more amenable to helping their borrowers than ever before ...so worth speaking to them also.

HTH

Angexx