Advice, please help for rent before going BR

Angiepange

Hi
Would really appreciate any advice from out there, just feel so much alone coping with it all.

We now think we need to move out of our home, rent somewhere and then go BR, feel such a failure and probably nearly at rock bottom, sure it will all get worse but i am so tired of spending the last 2 months trying to get advice and info and come to a decision on how to sort out this debt hell.

Our mortgage is interest only fixed till nov 2010 & Jun 2011( all lumped into 1 payment £740 pm) other unsecured debts of £40000. To rent around here we are looking at £700/750pm. If we leave our house, hand keys back and rent, would the OR find that unacceptable as we would not be saving anything on housing costs? Could they say, why didnt you stay in the house cos you are not saving anything by renting? Sorry if it sounds a stupid question!

Reason I ask is we think when our fixed rate ends the payments are likely to be higher than they are now, we are in negative equity, we wont be able to shop around as we would be BR, and as the mortgage is virtually all interest to convert it to repayment would cost even more!!

Thanks to anyone who can help
Angie

PNPSUKNET

You house will become the property of the OR once you bankrupt, they will sell the house so renting would be your only option. Maybe worth looking at social housing.

tigerfeet2006

PNPSUKNET wrote: »

You house will become the property of the OR once you bankrupt, they will sell the house so renting would be your only option. Maybe worth looking at social housing.

The house will NOT become the property of the OR once you are BR. The OR will have nothing to do with the house as it is a secured debt. He will only become interested once the mortgage company has sold it and there is a shortfall to be paid. This will then fall into the BR and the OR will then deal with it, not before.

Angie, if you feel that renting is the best thing for your family then the OR will not object to it at all.

Merry_Gentry

It's good that you are looking longer term than what you are paying now - if you really don't think you'll be able to pay the mortgage once the fixed rate ends, then renting seems the logical choice. The OR won't have a problem with it.

Angiepange

Thanks for replies,

It means alot :T the house is a big consideration in deciding what is best way forward so thanks again you guys, your advice is appreciated:A

miss_spooky

PNPSUKNET wrote: »

You house will become the property of the OR once you bankrupt, they will sell the house so renting would be your only option. Maybe worth looking at social housing.

Just to bare in mind - To look at social housing during bankruptcy is a very grey area. I was evicted a few years ago for rent arrears whilst on a dmp. I went to the council and was told that they will investigate to see if they had a duty to house me but if they found that I had made myself intentionally homeless - not paid my rent but paid into dmp - then the councill will not have a duty and I would have to make my own arrangements.

If you vol repo your house, you could be seen to be intentionaly making yourself homeless.

HTH

MS.x

peachyprice

Angie,
I would hold fire on moving out of your house for now. You won't lose it when you go BR as you have no equity, but as you don't know what your mortgage payments will be at the end of your fixed term it would be unwise to leave the house on the chance that they might be higher.

You shouldn't need to remortgage when the term ends, it will automatically go to the standard variable rate, which with the majority of banks it really low at the moment.

If the time comes and you really can't afford the payments and decide to leave the house the mortgage shortfall will still be included in your BR, even after you're discharged, even a few years down the line.

So to give it up now, bearing in mind you won't be saving anything by renting, could turn out to be a complete waste, but if it does come to the worse you're still covered.

HTH

peachyprice

PNPSUKNET wrote: »

You house will become the property of the OR once you bankrupt, they will sell the house so renting would be your only option. Maybe worth looking at social housing.

Sorry, that's just not so. Op has no equity, the OR will have no interest in the house.

BROKEBUT4HOPE

I too owned and lived in my home and as the interest days dropped, being on an interest mortgage only i was only paying £300.00.
But I am now going B because i am heavily in debt.
And i moved out because i put in £15k deposit down on the house and i believe through reading and professional, that there will some equity which the OR will want.
I have also moved out because i believe that it will go into the OR's hands and i will be told to move anyway as they will want to pay some of my debtors off with the sale of the house am i correct to believe this?

peachyprice

Not necessarily, no.

The 15k deposit you paid is irrelevant. The important thing is how much it's worth in the current climate with falling prices compared to how much mortgage is outstanding.

The OR will not take a house that has no, or little, equity. It costs alot to force a sale through and simply isn't worth it for anything with less than £5k equity.

We went BR last March with £20k equity and are still in the house, I doubt there still is £20K due to falling prices, but they haven't come after us for any of it.

If you're living in your house the OR will usually leave you alone for a year before making any decision, and only has a max of 3 years to take action. If house prices continue to fall it just won't be worth the OR bothering with your house.

The OR would also a 3rd party bought the beneficial interest in the house at a much reduced rate than be saddled with a house to sell, they really don't want to turf you out of a home and would rather compromise.

Angiepange

If house prices rise in the 3 years after you go BR and you have bought the beneficial interest in the meantime can the OR make you sell to gain the equity for creditors? and can you buy the BI yourself or does it have to be someone who is not BR?

Read alot on here about difficulty in renting when BR so guess i was thinking that if we stay in house and when fixed rate ends cant manage new payment, even though we would be discharged by then would it be impossible to rent cos we would fail the credit checks?

peachyprice thanks for your reply much appreciated:T