Am I kidding myself? Selling house v respossession? Advice please?

Stressedscottish

Hi there
Not really sure what to do for the best and having a bit of a headless chicken day which isn't getting me anywhere! We currently live in a house which I have a mortgage on with Natwest. Hubby and I took out a secured loan on it a few years back through Nemo finance when hubby's business was going really well. Hubbys business looks like it is going to fold due to the current recession. We have spoke to Insolvency Adviser and are looking at BR for each of us. I am unable to meet the secured loan and CC payments from my salary alone. Not even minimum payments so we are incurring charges all over the place. We are fully prepared to move into a rented property, we would try to make this nearer my work to cut down on commute. IA told me that as we can't pay secured loan not to bother with mortgage either and start to use that money to build up a deposit and rent etc. This is the first month we have missed either payment.

My questions are;
1. Is it worth trying to get the house valued ourselves and put in on the market now to see if we can sell it before it comes to reposession?
2. If we decided to do this and were luck enough to find a buyer would we need agreement from the secured loan company?
3. If we wait for it to be reposessed how long could that take?
4. Would we be better finding somewhere to rent now, just walking away before it gets that far and handing the keys back to Natwest?

I don't know if I am kidding myself that the house will sell before it gets as far as reposession. Mortgage is about £70,000 and secured loan gave me a settlement figure of £80,000. So will be looking at negative equity. I think I've almost managed to get my head around the whole BR thing but still have a problem with the shame of reposession, what it will mean to us way down the line if we want back onto the property ladder again. Also have quite a public job with the local authority in a rural area with a very "gossipy rural" outlook. Even if we move to another town it will become common knowledge that our house was resposessed and this could make my credability at work, supporting and advising vulnerable people in the community difficult.

5 Lastly since I told my family at the weekend they keep saying that no matter which route we go down we will still be liable for any shortfall in the mortgage for years to come and the thought of this is terrifying! Are they right?

Please can you help me to clarify my thoughts? I took the day off work today while my son is with the childminder to try to get things sorted. Be that bank accounts (managed to do this), painting (refreshing rooms with leftover paint) or sorting through things to sell (via ebay or car bootsales) and haven't acheived anything yet! I can't seem to see the wood for the trees and am feeling a bit overwhelmed to be honest. Can anyone help clear my mind or just give me a kick up the bum!
Thanks,
StressedScottish

sieve

Hi SS,

If you are unable to meet both mortgage and secured loan payments and the house is in negative equity, then it's a waste of both your time and money (home info pack, etc etc) to try and sell it yourself. Just tell Natwest you want to go through a voluntary repo and then its their problem.

If you go down the repo route and then go bankrupt (or go bankrupt and then do a voluntary repo) then any shortfall in the mortgage/secured loan WILL BE INCLUDED in your bankruptcy, so I'm sorry to say this but your family is wrong. However, when you tell the bank to repossess, UNDER NO CIRCUMSTANCES sign anything that the lender sends you. They will try and get you to sign a deed of acknowledgement, which has been known to convert the shortfall into a debt post bankruptcy, which you would be liable for. It's not a problem for you if you don't sign it as they're taking the house anyway.

Hope that helps.

Cheers

S

Stressedscottish

Hi sieve
We definitely can't afford the secured loan or the unsecured debt, but could manage to make the mortgage repayments just! We only defaulty on it this month because this was the advise of the IA. Now I'm starting to panic and have a few second thoughts. Not about the BR but I suppose about what people will say. I know I need to toughen up but things have really hit me over the weekend and I guess I haven't as much front as I thought I had.
I started thinking/daydreaming that maybe we could sell the house before repo and therefore avoid that extra stigma. i know I shouldn't be influenced by what people think but I think hearing how disappointed my mum was has shaken my confidence a bit.
Do you have any idea of timescales from stopping paying secured loans or mortgage payments until reposession?
thanks,
SS

flowergirlgush

reposession usually takes min 3 - 6 months, maybe longer, depending on your lender. So you can stop paying the motgage and loan now and save a dposit for rented.

I had 3 houses before i went bankrupt, one sold for a shortfall of £16k plus £56k secured loan before bankrupty (which had been reposessed). This all went into my bankruptcy.

Another house had a repo order on it before BR but had not been repo'd. The mortgage company still ring me to try and pay the debt. There nothing they can do though, and when they repo and sell it, the debt will fall into my BR.

Same with house i lived in, i stopped paying the mortgage on that 3 months before i went BR and moved. They have been ok and not been chasing me for anything since BR. Again any debt will fall into BR when they repo and sell it.

I havent signed anything so good advice is DO NOT SIGN ANYTHING as you may then be liable for any debts from sale of property.

Basically, my advice would be that its not worth stressing over, esp if you have no real hope of ever being able to pay the debts. I wish i had gone BR a long time ago instead of trying to juggle everything and getting in even more of a mess. Clean slate was def the best path. Although it is not a pleasant process It doesnt carry as much of a stigma as you may think, esp in this day and age. I hope you can decide which route best for you. Good luck

Stressedscottish

Hi Flowergirlgush
Thanks for your reply. At least it seems my family are completely wrong about the shortfall debt, thankfully. I think that's why I'm feeling a bit emtional about everything today. When it was just hubby and I posting on here or talking to the IA there was still an unreal quality to everything. Now there is no denying this will happen it's just a case of doing the best I can to prepare so that things have as little an impact as possible for my son.
I will make sure the house has a really good clean and sort out and get it valued so that we have an idea of the figures. I don't think we will go to the expense of sellers packs etc. I guess I should concentrate my efforts on sorting out our future and not dwell too much on the past!
Can I just ask, was it the mortgage and reposession that triggered your bankruptcy or did you do it yourself? Sorry if that's too personal. It's just that we live in Scotland and due to my job wouldn't qualify under the low income route so the only way to BR is either creditor concurrence which I understand is really rare or to wait for a creditor to make us bankrupt. Again just trying to get an idea of timescales really.
Thanks for the feedback,
SS