advice needed plz regarding volutary repossession & bankruptcy

sarahloukpntia

hi
ok i will start at the begginning.

my husband & i bought our house 5 years ago. last year we finally gave in and moved back to my parents as we couldn't cope with all the bills. we have still been paying mortgage, reduced council tax as the house is empty, water, electric & gas. we have also been paying other debts that have mounted up over the years. my parents have been supporting us for things such as car insurance & food & putting a roof over our heads for the past year or so.

our intentions were to sort out the house & then sell it. we took down a partioning wall upstairs, took down some ceilings as they were polystyrene tiles, etc with the intention that we would re-do them & then put it on the market.

we now cannot afford to do the rest of the work to the house to make it either sell-able or rent-able.

we have 2 loans-one in my name which i have still been paying & another for £15,000 in my husband's name which we got behind paying so is now tied to the house.

what i'd like to know is, is it possible to just give our house to the mortgage company & go bankrupt?

my parents cannot afford to support us any longer so we need to contribute by paying rent to them. we just dont have to do the money to do this unless we get rid of our house.

i dont really know where to start in all this. will we still have a huge mortgage outstanding if we give the house back, would they even take it back? our mortgage is with the halifax. up till now i have still paid our mortgage but not paid other things instead if that make sense.

do i just stop paying? any advice would be great please. i try to get on when i can but have 2 toddlers so sometimes wont reply straight away
thanks so much.

peachyprice

Hi Sarahlou,
Welcome to the forum
If you can no longer afford the house, yes you can stop paying the mortgage and either wait for it to be repossessed or contact the mortgage lender and tell them you want to give it up, if you do the latter do not sign anything they send you.

If you go bankrupt the shortfall from the mortgage and all your other debts will be included. It doesn't matter whether you go bankrupt before or after the house is repossessed, it will still be included.

sarahloukpntia

hello
thanks for the lovely welcome & the advice. so as we cant afford to keep the house we can either just stop paying & wait for repossession or contact them & tell them we want to give it up?

how long does repossession take if we were to just stop paying? we dont live there anymore & most of our belongings are at my parents house.

if we were to go bankrupt would that clear the debt of my husbands loan, etc?

we have one car between us that i use to take my son to playschool, hospital run's(i help my mum care for my grandparents), etc. would our car be taken from us? it's a T reg saxo so nearly 10 years old.

hang on DD crying

nervousmother

We were in a similar situation, we had to move out as we couldnt afford to stay there, mainly with the mortgage increasing nearly double! we stopped paying the mortgage and it was re-possessed but it took them 9 months to do it! (mean while we tried to sell it) we both then went bankrupt and all debts are included, including loans credit cards and bank overdraft.

good luck

sarahloukpntia

do we have to try & sell the house first then? sorry for so many questions, only just touching on this subject. thanks

nervousmother

At the time we were trying to sell our house we did not know we would be going BR, we only knew we would go BR when the house had been repossessed and Northern rock have it marketed at £194k, this would leave us with a £116k shortfall. no way can we pay it back and I know they can persue us for the money for up to 12 years, when we will have another house and equity in that, i figured the effects of the BR will last 3 years with a IPO and give us the security of knowing Northern rock wont be able to ask for the £116k in the future..... If you are going to go BR then just stop paying the mortgage.

sarahloukpntia

ok thank you. my husband's loan is tied to the house as we couldnt afford to pay it so they tied it to the house. we offered to pay a lower amount but they didnt accept it.

i know what u mean now-even if the house was sold you would still owe so much. can i ask wht an IPO is plz?

if you go bankrupt where do i start?
thanks

nervousmother

a IPO is a income payment order, when you become BR you may have to make payments for 3 years, It does not happen to everyone, I dont know if it will happen to us yet. you will have to list all your income and all your outgoings, the amount that is left is what the IPO is based on and the OR can take up to 70% of that amount. at least you will be left with some income though! we agreed to pay our creditors through payplan and were left having to cut our food bills!
good luck :-)

peachyprice

Hi again,
If you really want to do this, you must get advice from one of the debt charities, at the top of the page: CCCS, CAB, National Debt Line.

You can stop paying all bills and the mortgage related to the house, and you can save this money to pay your fees. You can also stop paying all of your creditors, but they will start hassling you even more.

An IPA/IPO is where the official receiver looks at your budget and if you have any money left after paying all your everyday living expenses and a surplus of £99 you pay something to your creditors for 36 months.

nervousmother

sorry forgot to say, You start by going to the CAB, they will help with the forms. You can call the county court to have them send the forms to you.

sometimes the hardest decisions are the best thing for you, Dont worry about the court itself, ours was the 6th of january everyone was nice and it was straight forward,

tips, on day of BR go to the co-op bank to open a new account, you get online banking & a visa electron debit card.

transfer all s/o and direct debits straight away especially benefits if you get them,

a company called cashplus offer a pre pay mastercard, you put the money on the card before you spend it (at the post office or by s/o) this gives you a mastercard that is accepted in most places and gives the added benefit of purchase protection knowing you cant spend money you dont have.

good luck again :-)