Can the bank take my house?

PovertyStricken_2

I'm in danger of defaulting on the overdraft on my current account and the credit card linked to it. The total amount is £3,500. It's with one of the big clearing banks. I live in a rented flat but I have an investment property. The bank knows that I own it but they don't know the address. The £3,500 is unsecured, but can the bank take me to court and get a charge on the property or have me declared bankrupt or something? I've read the Ts and Cs for both accounts and all I can see is that the bank will demand the money to be repaid - but it doesn't say what powers they have to recover it.

I don't know whether this is relevant, but the reason for the default is a health problem.

(My credit rating is already completely screwed, so that's not an issue.)

peachyprice

Yes they can put a charging order on the house if they get a CCJ which you then default on.

They can also make you bankrupt, but that is a lot less likely.

fatbelly

PovertyStricken wrote: »

can the bank take me to court and get a charge on the property or have me declared bankrupt or something?

It's possible but unlikely. Make them an offer of what you can afford.

PovertyStricken_2

Interesting, thanks. After they get a charging order can they force me to sell the house?

If I decide to sell it and don't give them their slice of the proceeds, what happens? The house is mortgaged, so can they force the lender to give them their slice when the mortgage is redeemed?

MercMan

Once a Charging Order is on a property they can then apply for an Order of Sale but IIRC they have to talk to the lender first, assuming you have a Mortgage on the property.

The Charging Order is placed with the Land Registry so when the property is sold they get their cut (the Second Charge) after the lender ( the First Charge) takes theirs and you get what's left.

peachyprice

They won't want to make you sell the house, they'd rather you came to an agreement to pay off the debt. If you're unable to pay at the moment because of illness they'll probably be quite happy for the charging order to sit there until your circumstances improve, or you sell the house.

The charging order is registered with the Land Registry, if you sell the house your solicitor will automatically pay off the debt from the proceeds. If the house isn't selling for enough to over the mortgage and CO they can stop the sale going through.

HTH

PovertyStricken_2

OK. One more question - if my sister becomes co-mortgagee on the house, could the second charge affect her? Obviously it would reduce her proceeds on the sale, but would it affect her credit rating?

peachyprice

It would in so far as she would then have a financial association with you and your poor credit file would be linked to hers.

PovertyStricken_2

Hmmm. Good point. Here's the problem. My sister lent me £50k to do up the house. This was an informal arrangement - she's not on the deeds. My health is getting worse so we have agreed that she will take responsibility for collecting rent, managing the building work and paying the mortgage. The lender won't accept mortgage payments from her because she's not a signatory to the mortgage. Is there a way we can rejig things so that she can make the mortgage payments without any involvement from me, and without having a financial association with me?

peachyprice

She could pay the mortgage money into your account which you could then pay to the mortgage, or is that not what you mean?

You could always set up a separate account in your name to do this to keep it separate from your finances.

PovertyStricken_2

The trouble is that my account is soon to go tits-up and I will find it very hard to get another one.