BR and Repossession

MyCashTimeMMT

I am trying to get my head around BR and losing your home.

We are now earning £14k a year less which means we can afford our bills but nothing else including food.

If we decide to go BR in order to lose our unsecured debt which totals around £400 a month, do we then get a say in keeping our home?

In theory, if we keep paying our mortgage, secured loan, council tax etc after we go BR, do we stand a chance of keeping our house?

We believe it to be in negative equity so cannot see why us losing it would benefit anyone.

Our secured debt is around £1,000 a month so would an OR say its too high when we could rent for around £700?

If we did keep the house, when our mortgage product expires in July 2010 would we just revert to the variable rate or would we be charged a high interest rate, ie 35%, like the credit cards for repairing your credit limit?

Are bankruptcy and repossession seperate issues?

Any opinions would be helpful

Thanks

fiveyearplan

MyCashTimeMMT wrote: »

I am trying to get my head around BR and losing your home.

We are now earning £14k a year less which means we can afford our bills but nothing else including food. Stop paying bills but keep on top of priority debts like mortgage/secured loan/council tax/utilities etc

If we decide to go BR in order to lose our unsecured debt which totals around £400 a month, do we then get a say in keeping our home? Since you are in negative equity you should be able to keep your home.

In theory, if we keep paying our mortgage, secured loan, council tax etc after we go BR, do we stand a chance of keeping our house? Yes

We believe it to be in negative equity so cannot see why us losing it would benefit anyone. Correct

Our secured debt is around £1,000 a month so would an OR say its too high when we could rent for around £700? Check again how much rentals are in your area. I've only seen a very few cases where people were expected to move because it was cheaper to rent in the area but I suppose it could happen. You won't know until you have your OR interview.

If we did keep the house, when our mortgage product expires in July 2010 would we just revert to the variable rate or would we be charged a high interest rate, ie 35%, like the credit cards for repairing your credit limit? You would revert to whatever it says in your mortgage details. Probably x% above base rate or something. Bankruptcy won't make a difference unless you try and remortgage.

Are bankruptcy and repossession seperate issues? yes

Any opinions would be helpful

Thanks

Hi and welcome. I've made some comments in red above.

MyCashTimeMMT

Thanks fiveyearplan - your comments make me feel a little more like I am understanding all this!

You were also very helpful to me when I posted on here frequently back in the Spring.

Thanks again.

Angiepange

Hi MCT,

We are in a similair position to you with deciding what to do re our house and BR. My main concern is our fix rate ends end next year and am unsure if we will afford new payments if rates have risen by then. Also in neg equity, so do we rent and go for vol repo or do we stay in house and take chance with mortgage (costs same as rent here at mo). I have been getting info from everywhere about this as it is not clear to me yet how long mortgage shortfall would be included in your BR if you stay in home and then have to move out further down line and bank sells at a loss ie would shortfall only be included while you are BR and not after discharge?

I have got help from community legal advice who will be speaking to a specialist about BR and home and hopefully giving me some definite answers on this as we cant move forward till we know what we have to do with home.

I also rang our mortgage co. and asked them how they would view us if we go BR and they said as long as mortgage is paid and up to date it would not be an issue and we would revert to their SVR when fixed ends.

I will keeep up dating as i hear more info. Good luck to you, it is such a stressful situ to deal with!!

Angie

peachyprice

Angiepange wrote: »

Hi MCT,

if you stay in home and then have to move out further down line and bank sells at a loss ie would shortfall only be included while you are BR and not after discharge?

If my house is sold sometime after the bankruptcy order is any shortfall on the mortgage still a debt in my bankruptcy?

Answer: A debt which is secured by a mortgage or a charge on a property is still a provable bankruptcy debt. The mortgage loan company is "a secured creditor" which means they have rights over an asset, the
house, and can require the asset to be sold to pay their debt. These rights are not affected by the bankruptcy. On the making of a bankruptcy order the mortgage loan company could
make a claim in the proceedings but, unless it wished to give up the security, could only claim for any (estimated) shortfall.
If you continue to live in the property it is likely that you will continue to make payments to the mortgage loan company to avoid the property being re-possessed. When the property is eventually sold any
shortfall to the mortgage loan company is still a provable debt in the bankruptcy, even if you have been discharged, as you are released from the debt on discharge.

Your bankruptcy does not affect the obligations of any joint owner who has not been made bankrupt to repay the mortgage loan debt or any shortfall, as they are still liable for the whole of the debt.

After the date of the bankruptcy order the mortgage loan creditor may ask you to sign a "deed of acknowledgment" of the outstanding debt. If you have signed such a deed the mortgage loan creditor can take action against you to recover any shortfall following the sale of the property.
From here:

http://www.insolvency.gov.uk/faq/faq.htm#16

HTH

Angiepange

Thanks Peachy,

I hadnt seen this info before and it does help. i was really confused because i spoke to my local OR office about it and was left with the impression further neg equity or shortfall would not be included in the BR! Hence looking elsewhere for the info.

I did wonder if they said it would not be included because you can sign the banks form to take responsibility for it? Sorry i sound so confused, i guess its weeks and weeks of research into BR etc and brain overload!! I feel like im losing the plot at the moment so thanks for all replies to many questions:A
Angie

peachyprice

As long as you don't sign the deed of acknolwedgement after your BR date you will be fine. If you stay in the house and pay the mortgage it's unlikely you'll hear a word from the mortgage company.

They only usually ask you to sign one if you give the house up for voluntary repossession, if you don't sign it all it means is that repossession process would take longer to go through.

MyCashTimeMMT

Thanks for the comments - what a confusing world!

So if we go BR and are able to keep our house, when our fixed rate ends we are 'stuck' in the nicest possible way with Nationwide as changing would involve remortgaging which is credit we wouldn't get due to being BR.

Our secured loan is variable anyway so we just have to hope and pray for the good interest rate (can they change it when they find out we are BR? its with a different lender)

I believe we are in negative equity so hopefully this means we can keep our house and our mortgage rate is 5.98% fixed until July 2010 so hopefully it wouldn't go higher than this in the period we have a poor credit record although this is obviously just hope!

One thing I am struggling with is once the OR sees our SOA based on not having credit card debt can they say we can't afford our house? and if they do what are we faced with then??

peachyprice

As long as you can afford all your monthly payments the OR cannot say you can't afford your house.

However, in rare cases if the OR feels that your mortgage and secured loan combined are far in excess if renting a similar property in your area they can disallow the full payments on your SoA, in which case you would either have to move out or finance the extra from your surplus, but this is rare.

Once your fixed rate ends you should automatically go on to your lenders SVR, this will probably be advertised on their website, and currently SVR's are running lower than fixed rates. Going BR in the meantime shouldn't effect this.

However, if you were to re-mortgage after BR it would be new lending and any shortfall if the house were repossessed would no longer be covered by your BR.