Repossession: does the sale have to be completed before the bankruptcy expires?

SunshineGal_2

Hi

I’ve gone down the repossession route and have a question. My bankruptcy expires near the end of August (bar the IPA and BRU). I’m planning on having any shortfall owed to the mortgage company and second charge lender after the sale incorporated into my bankruptcy as a ‘provable debt’ and effectively written off. However, although the repossession has already taken place, the process of selling the property is dragging on and isn’t guaranteed to be completed by the bankruptcy expiry date. If the sale takes place after this date, will the shortfall still qualify as a provable debt?

Thanks
SG

Angiepange

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


Hi

I got this info from peachyprice when i had a similair question so hope you find it helps you,

Angie x

debt_doctor

Absolutely correct.

DD

SunshineGal_2

Thanks for taking the trouble to reply. However, I knew that stuff already. I'm in negative equity, so wasn't repossessed as part of the br. I haven't signed a deed of acknowledgement or bought out the beneficial interest. Therefore, I have had the property voluntarily repossessed by the mortgage company and am eligible to have any post-sale shortfall still owed included in my br.

My question concerns whether the sale has to be completed prior to my br discharge date in order for the shortfall to be a provable debt in the br.

Since posting, however, I may have the answer. According to someone on the forum at http://www.bankruptcyhelp.org.uk/forum/topic.asp?whichpage=1&TOPIC_ID=8322&#36047 , where I posted the same question:

"Was the property repossessed during the time you were BR? If so, then any shortfall should be included in the BR. If the mortgage wasn't put on the SOA then you should inform the OR just to make sure that the shortfall is included in the BR."

SG

fermi

SunshineGal wrote: »

My question concerns whether the sale has to be completed prior to my br discharge date in order for the shortfall to be a provable debt in the br.

No. It doesn't matter whether the sales goes through before or after your are discharged. The shortfall goes into the bankruptcy in either case.

debt_doctor

It makes no difference to you when the house is sold, whether vol repo or not, even if the property is sold after your discharge the shortfall will be included in your BR.

DD

debt_doctor

It also makes no difference whether the shortfall was put on to the forms or not. All provable debts prior to the BR hearing are included ( including later unsecured shortfalls) if you have missed a debt off the forms it does not matter.

DD