Is Bankrupcy our savior?

Doomboy

Hi everyone,
This is my first time post here.
My wife and I are going through financial problems and are seriously considering Bankruptcy. I am Hoping that any of you guys can help us in answering any questions that will crop up as the days go by so that we can try and make a decision.

A little info....
My wife and I are facing a financial crysis. We have huge debts in single and joint names and have been through the stage of having, first, a company (Spectrum), and recently CAB, try to help us manage our debt problem.

I was made redundant in Aug last year and since have been on jobseekers allowance. My wife has been on incapacity benefit for quite a few years now.
We have a little boy age 10 who has ASD for whom we are still in the process of trying to get DLA.

We have a mortgage with Northern Rock which comes in at around £67000 and is a monthly payment of approx £450 and unfortunately a secured loan with First Plus which is around £55000 and is a monthly payment of approx £610.
We have not been paying the mortgage for Jan and now Feb of this year and have also missed the Jan and Feb payment to the secured First Plus loan.
We do have morgage insurance which came into effect in Dec last year but have been saving this insurance payment to help us both to fund probable bankrupcy.

We also owe a large amount of debt to various other creditors 3 of which have CCJs made against us. ( I will post all these ASAP).

We have been given the BR forms from CAB, for both of us to fill in seperate (hav'nt touched them yet).

One of our main concerns is...what will happen to the house if we both go BR?...We realise that the house will probably be lost but how long will we have to find somwhere else to live?.....and if we are allowed some time to find somwhere...how long would that time be and do we still have to pay the morgage and secured loan monthly payments during that time?

Hope someone can shed some light....thanks

sieve

Sorry to hear of your situation Doomboy.

Do you have any equity in the house and is it jointly owned?

peachyprice

Also, if you didn't have all your other debts would you be able to afford the mortgage and secured loan?

Doomboy

Thanks for the reply,

The house was last valued around a year ago at approx £120000 but ofcourse with the current climate its probably gone down since. So there is not a geat deal of equity in it really.

The Cab have been managing our other debt and minumum payments of £1 per month are being sent to most which totals around £10...the others are ccj payments and they come to approx £10 per month also.

Because I am unemployed we just cant make the secured loan (first plus) payment....we have spoken to FP and they have agreed that we can miss jan and feb payment but we will have to pay £100 extra on top of what we usually pay per month for the next 6 or so months starting March.

Im so scared and confused as to what to do...if it was just myself it would not be a problem but I have a family and Im terrified of being homeless and the effect it would have on them.

Doomboy

oh sorry the house is jointly owned

sieve

OK the reason I asked is because if you are in negative equity, apparently you can usually get a friend or relative to buy your beneficial interest in the house off the official receiver for £1 (plus the legal costs, works out about £300 I think) which will take the house out of the bankruptcy and allow you to stay in it, provided you can meet your mortgage and other secured loan payments.

That's what I'm banking on anyway as I am going bankrupt next month, and own a house which is in negative equity so hopefully I will be able to do the same and stay on in mine.

Simpsona

Hi Doomboy,
Im realtively new on here but I've found this site my savior as I have so many questions too and loads get answered which is great! Me and my hubby are going BR together and our main reasons for not doing it earlier was wories about loosing the house! Ours was worth around 115,000 last year and now stands at 100,000! So you may find you are in neg equity? We are mortgaged up to 103,000 so we are! I'm hoping and praying too that the house will be safe and from what I've read we should be ok?

We also have a 10 year old son with ASD (Aspergers Syndrome and ADHD) along with 2 daughters so it is a huge worry how what we do effects them!
I took the plunge today and booked the court, March 6th! I am still woried bout the house but hopefully we'll be fine. And as for other posessions I have nothing for them to take.

Best of luck!! Have a look at other house prices in your surrounding streets etc, thats what I've just done this morning and it confirmed what I thought mine was worth.;)

mazzatee

Hi Doomboy

Nice to hear from you and indeed bankruptcy could be a good option for you. What did CAB say about this, have they recommended you file for bankruptcy?

Here is a good site that tells you the prices that houses sold in your area. Just type in your postcode and it may help with ascertaining the value of your house. Also bear in mind that house prices have dropped by approx 15% in last year or so and in some cases even more than that.

http://www.houseprices.co.uk/

Best of luck and keep posting eveyone here will help you.

peachyprice

If you cannot afford both the mortgage and secured loan I'm afraid they will eventually repossess, the secured loan would not be included in bankruptcy.

In light of that fact it would probably be wise to stop paying both and use the money to save for moving into rented accommodation.

Doomboy

Thanks for the replies guys

Sieve...HI....I have heard of that but found it confusing....cheers you have explained it so simply!...it would be a possibility if I was employed...though I would need a fairly large ish salary to maintain the payments to the morgy and sec loan.

Simpsona....Hi...our son has Aspergers too!....I have been browsing this forum for a while and yes there loads of great people helping others.

mazzatee...Hi....the cab guys, who are currently managing or creditors, have only suggested BR as a last resort though they also realise that we are in a bit of a larger pickle due to me being unemployed. They also suggested IVA but we would have to have 2 IVAs one for me and the other for my wife...but the payments on those are impossible for us....its that damnable fist plus loan thats the big problem. Thanks for that link...it does look like we may have neg equity but like I said before I would need to be employed.

If we go bankrupt and we can't make any payments to the mortgage and the secured loan...what happens?....are we kicked out straight away?

Doomboy

oops sorry peachyprice missed your post....how long would we have if they repossess?