bankruptcy and property

dipsy

Hi

sorry if this has been asked before....

basically if someone has a property that was theirs in their own right, then has added someone to the mortgage and they have now parted ways and the person who had the house to start off with is considering bankruptcy

a) What happens if they take the house in the course of the bankruptcy but there is no equity and it doesn't cover the outstanding mortgage when it is sold - is the bankrupt person still chased for any outstanding mortgage?

b) what happens to the party that has left, (name is still on mortgage at present) - are they affected by the bankruptcy at all?

ie do they have to pay any shortfall in the value of the property and the amount owed? or does any shortfall disappear when the first person declares themselves bankrupt?

Another question

if a person owns a car, well it is owned by a bank that loaned the money for the car, and they need it for work - no public transport to where they work, what would happen here, as obviously if they go bankrupt the loan would not be repaid, does that mean they would automatically take the car? as I really can't see them wearing the debt being written off and allowing the person to keep the car

Is there a limit as to how much you can earn when you are bankrupt?

Sorry if I am asking previously asked questions, but I know nothing about bankruptcy and asking on behalf of someone else

Many thanks

flowergirlgush

Ill try and help but someone else better qualified probably be along soon.

I think what would happen with the house if it was in joint names and one went bankrupt, the other person is liable for the shortfall if it is reposessed, unless of course they take on the repayments, and yes they would chase for the outstanding amount if there was a shortfall.

If you were BR it would fall in to your BR so wouldnt be persued for balance

not sure bout car

JCS1

Is this car financed via a Loan or HP?

skylight

Basically;

The property - it may or may not be lost in BR. *If* you are able to keep it, and this usually depends on whether you have negative equity in it AND you are up to date on mortgage payments and secured loans AND you can continue these payments, then "usually" the property is not lost.

However. If you want to give up the property - then any shortfall in the property (difference between mortgage loan and sale price plus fees) would fall soley to the other mortgagee if there is one, or is included in your BR estate if there is not one.

The car - you need to know who legally owns the car. Is it on HP or other secured loan? Or was it a bank loan that paid for the car but is in fact an unsecured cash loan?? It does depend which it is. If its on HP, then you need to check the HP contract as many have BR clauses in them that they take the car - although this does depend on the company and things such as how many payments are left and the value of the vehicle (not the amount of the loan outstanding). If the HP company allows you to keep the car its then up to the OR whether or not they will allow the payments to continued out of the SOA.
Now. If you legally own the vehicle and its an ordinary loan, then the loan goes into the BR estate and the OR decides if you can keep the car or not. This solely depends on whether the car is necessary (ie its needed to get to work etc) and then the value. So if you work and the car is valued at less than £2k, then yes - the loan goes into BR but you should be able to keep the car.

There is no limit on what you can earn in BR. You may have to pay an IPA - Income Payment Agreement. This is a percentage of your surplus after all your allowed expenses have been deducted from your income. And again, this depends on where your income comes from!

As you can see - nothing is simple in BR! I would strongly recommend that your friend calls one of the debt charities (or more than one) to gather their opinion on her/his personal situation.

Hope it helps!

dipsy

JCS1 wrote: »

Is this car financed via a Loan or HP?

car is via unsecured loan

dipsy

skylight wrote: »

Basically;

The property - it may or may not be lost in BR. *If* you are able to keep it, and this usually depends on whether you have negative equity in it AND you are up to date on mortgage payments and secured loans AND you can continue these payments, then "usually" the property is not lost.

The property has no equity in it/no missed payments as yet

However. If you want to give up the property - then any shortfall in the property (difference between mortgage loan and sale price plus fees) would fall soley to the other mortgagee if there is one, or is included in your BR estate if there is not one.

Two people on the mortgage, not together any more and she wants to be taken off the mortgage - which you can understand - he wants to go bankrupt, hand the house back and basically start a fresh, rent a property and be free of debt

The car - you need to know who legally owns the car. Is it on HP or other secured loan? Or was it a bank loan that paid for the car but is in fact an unsecured cash loan?? It does depend which it is. If its on HP, then you need to check the HP contract as many have BR clauses in them that they take the car - although this does depend on the company and things such as how many payments are left and the value of the vehicle (not the amount of the loan outstanding). If the HP company allows you to keep the car its then up to the OR whether or not they will allow the payments to continued out of the SOA.
Now. If you legally own the vehicle and its an ordinary loan, then the loan goes into the BR estate and the OR decides if you can keep the car or not.

Car was bought with a personal loan - reasons for loan were given as needed for car purchase

This solely depends on whether the car is necessary (ie its needed to get to work etc) and then the value. So if you work and the car is valued at less than £2k, then yes - the loan goes into BR but you should be able to keep the car.

Will need to check value of car - will get him to check parkers or glasses

There is no limit on what you can earn in BR. You may have to pay an IPA - Income Payment Agreement. This is a percentage of your surplus after all your allowed expenses have been deducted from your income. And again, this depends on where your income comes from!

All income will be from one job

As you can see - nothing is simple in BR! I would strongly recommend that your friend calls one of the debt charities (or more than one) to gather their opinion on her/his personal situation.

Hope it helps!

Many thanks for all your answers, most helpful

I know nothing about bankruptcy and just assumed that if you declared bankrupt then you lost your home/car etc and all debts were written off, but quite clearly you still have to make payments towards the debts - is this correct?

Also the person concerned has said he has been told that after 12 months he can be discharged, is this normal??? I thought is was much longer.

Basically debts inc o/d, loans and credit card come to 26k, have gone through income and expenditure and it seems outgoings are £200 more than is coming in and this is not allowing for new clothes/house repairs etc

I think he is seeing bankruptcy as an option to get rid of the house that needs lots of repairs, wipe out debts and have a new start in a years time, anybody tell me if it works in this way?

Do you have had to default on payments to be allowed to go bankrupt?

He has some money coming his way soon and wants to put this away somewhere before approaching any of his creditors - he will explain as money he owed to a family member and get them to look after for him - is this viable?

Do they come and look at assets you accumulate during your time as undischarged bankrupt? I mean if someone bought you as a gift say a car/watch etc would they take it away

sorry for so many questions, just trying to gather as much info as possible

thanks

debt_doctor

Many thanks for all your answers, most helpful

I know nothing about bankruptcy and just assumed that if you declared bankrupt then you lost your home/car etc and all debts were written off, but quite clearly you still have to make payments towards the debts - is this correct? All unsecured debts are written off including shortfall from house sale. A BR is expected to pay between 50 - 70% of their surplus income over £ 99 per month to the insolvency service for 3 years.

Also the person concerned has said he has been told that after 12 months he can be discharged, is this normal??? I thought is was much longer.Automatic discharge is after 1 year, early discharge can be obtained.

Basically debts inc o/d, loans and credit card come to 26k, have gone through income and expenditure and it seems outgoings are £200 more than is coming in and this is not allowing for new clothes/house repairs etc

I think he is seeing bankruptcy as an option to get rid of the house that needs lots of repairs, wipe out debts and have a new start in a years time, anybody tell me if it works in this way? Thats exactly how it works ! Would be best to obtain rented acc. before BR.

Do you have had to default on payments to be allowed to go bankrupt? No, but you need to be insolvent ie; you cannot pay your debts as they fall due and / or your liabilities exceed your assets.

He has some money coming his way soon and wants to put this away somewhere before approaching any of his creditors - he will explain as money he owed to a family member and get them to look after for him - is this viable? NO. If he receives money before BR and pays of family then he will commit the BR offence of prefferential crediting, the insolvency service can chase the recipient for the money paid, during BR any money 'coming his way ' would be taken in full as an asset in BR.

Do they come and look at assets you accumulate during your time as undischarged bankrupt? I mean if someone bought you as a gift say a car/watch etc would they take it away. Any monies or property recived whilst undischarged will be at risk of being seized.

sorry for so many questions, just trying to gather as much info as possible

thanks

dipsy

debt_doctor wrote: »

All unsecured debts are written off including shortfall from house sale. A BR is expected to pay between 50 - 70% of their surplus income over £ 99 per month to the insolvency service for 3 years.

is there somewhere I can find out what they count as surplus ie what can he offset, maintenence payments (not through CSA but agreed between him and ex and has been this way for years), rent, food, utilities?

Automatic discharge is after 1 year, early discharge can be obtained.

How do you get early discharge and what does discharge mean in laymans terms?


NO. If he receives money before BR and pays of family then he will commit the BR offence of prefferential crediting, the insolvency service can chase the recipient for the money paid, during BR any money 'coming his way ' would be taken in full as an asset in BR.

What if the money never came into his account went straight to relatives account how would they know



If he was to approach his lenders and ask to come to arrangements with them for interest to be frozen and F&FS would this affect his credit rating? maybe this is a better option than bankruptcy?


Sorry for asking so many questions that I am sure have been asked before, but to be honest I dont know if he should

a) make a direct arrangement with creditors
b) IVA
c) bankruptcy

I am sure each as pros and cons but if you make a direct arrangement does your credit rating stay in tact and therefore less problems later on, or if you don't pay all outstanding and have F&FS is this marked as not having fufilled your obligations?

Many thanks again it has been very helpful

tigerfeet2006

Just to add to Debt Doctors excellent post that the other person wanting to remove their name from the mortgage will have problems. The mortgage company will probably require the other person to remortgage the house in their name and I suspect that if they are thinking of going BR then they will not have the finances able to do this, so if he does go BR then the shortfall in the repossesed house will fall to to the non BR to pay along with any joint loans.

sieve

dipsy wrote: »

All unsecured debts are written off including shortfall from house sale. A BR is expected to pay between 50 - 70% of their surplus income over £ 99 per month to the insolvency service for 3 years.

is there somewhere I can find out what they count as surplus ie what can he offset, maintenence payments (not through CSA but agreed between him and ex and has been this way for years), rent, food, utilities?

If you post his SOA up here, we will be able to suggest what he can keep and what will be disallowed

Automatic discharge is after 1 year, early discharge can be obtained.

How do you get early discharge and what does discharge mean in laymans terms?

You can't control early discharge yourself - if your case is VERY simple and you cooperate FULLY with the OR you MAY get it, but it is by no means a given. When you are discharged, you are no longer subject to bankruptcy restrictions - ie you can be the director of an ltd co, you can apply for credit of more than £500 (not that you would probably want to) etc etc, you no longer have to tell the OR about changes in circumstances...

NO. If he receives money before BR and pays of family then he will commit the BR offence of prefferential crediting, the insolvency service can chase the recipient for the money paid, during BR any money 'coming his way ' would be taken in full as an asset in BR.

What if the money never came into his account went straight to relatives account how would they know

That's fraud and he could be liable to prosecution if they found out

If he was to approach his lenders and ask to come to arrangements with them for interest to be frozen and F&FS would this affect his credit rating? maybe this is a better option than bankruptcy?

Yes this would affect his rating but not nearly as much as a BR would. Bankruptcy is an absolute LAST RESORT and if he has the option of coming to a reasonable repayment arrangement, he should take it rather than going BR.

Sorry for asking so many questions that I am sure have been asked before, but to be honest I dont know if he should

a) make a direct arrangement with creditors - if he can, yes
b) IVA - if he can't do (a), yes
c) bankruptcy - if he can't do (a) or (b), possibly

I am sure each as pros and cons but if you make a direct arrangement does your credit rating stay in tact and therefore less problems later on, or if you don't pay all outstanding and have F&FS is this marked as not having fufilled your obligations?

Many thanks again it has been very helpful

Answers above in red

tigerfeet2006

dipsy wrote: »

debt_doctor wrote: »

All unsecured debts are written off including shortfall from house sale. A BR is expected to pay between 50 - 70% of their surplus income over £ 99 per month to the insolvency service for 3 years.

is there somewhere I can find out what they count as surplus ie what can he offset, maintenence payments (not through CSA but agreed between him and ex and has been this way for years), rent, food, utilities?

If you pop up their SoA we can advise on what sort of levels are generally allowed. Each OR is different. Usually if the maintenance payment is on par with CSA payments then the OR will let it be paid. Use this template and then post on here. http://www.makesenseofcards.co.uk/soacalc.html

Automatic discharge is after 1 year, early discharge can be obtained.

How do you get early discharge and what does discharge mean in laymans terms? You can't just get early discharge. It depends on how complicated yout case is and how busy the OR is as to whether they have time to deal with ED's. It is rumoured that they may be halting ED's as the work load this year has increased. Just think 12 months and anything else is a bonus. Discharge is where you are discharged from your obligations as a BR. Links from the Bankruptcy Help sticky.
General information on bankruptcy.

• Official Insolvency Service publications and factsheets - Main index
• Guide to Bankruptcy (IS) (pdf)
• FAQ - General Bankruptcy Queries (IS)
• How to petition for your own bankruptcy (IS) (pdf)
• What happens when you are interviewed by the OR (IS) (pdf)
• Petitioning at the high court? - Help on the day (MSE)

NO. If he receives money before BR and pays of family then he will commit the BR offence of prefferential crediting, the insolvency service can chase the recipient for the money paid, during BR any money 'coming his way ' would be taken in full as an asset in BR.

What if the money never came into his account went straight to relatives account how would they know They probably wouldn't.



If he was to approach his lenders and ask to come to arrangements with them for interest to be frozen and F&FS would this affect his credit rating? maybe this is a better option than bankruptcy? Yes it would but not in such a harsh way as BR does. Get advice from one of the debt charities in my sig. There are also other listed in the Bankruptcy Help sticky.


Sorry for asking so many questions that I am sure have been asked before, but to be honest I dont know if he should

a) make a direct arrangement with creditors
b) IVA
c) bankruptcy

I am sure each as pros and cons but if you make a direct arrangement does your credit rating stay in tact and therefore less problems later on, or if you don't pay all outstanding and have F&FS is this marked as not having fufilled your obligations?

Many thanks again it has been very helpful

He really should talk to a debt charity. Iwill say though if he gives up the house then an IVA is not a good option.