My story, hope it's helpful to others

terr123

I successfully petitioned for bankruptcy last October and expect to be automatically discharged this October.

I ended up having outgoings larger than my incomings largely due to a marriage breakdown, high maintenance payments and a business that didn't do as well as expected.

I owed about £50-60k to banks and credit cards. I managed these pretty well by robbing Peter to pay Paul and never missed payments. This was not sustainable in the long term, though. I managed to get a ubiquitous Northern Rock 125% mortgage (which I was amazed by at the time) in 2007.

I decided in the middle of last year (and after taking advice from various sources, including this forum) that this unsustainable situation would best be resolved by petitioning for bankruptcy.

I started by winding up my limited company, as (I was told) it would cause greater problems if it needed to be dealt with in my bankruptcy. I decided that I would give the house back to Northern Rock. The reasons for this were threefold: 1) It was in negative equity and the best predictions suggested it would only get worse, 2) there were some suggestions that NR might try to attach the unsecured loan element of the 125% mortgage to the property so that it would not be written off in the BR (this was probably unfounded in retrospect), 3) I wanted a fresh start at a property not associated with the BR

Northern Rock tried to persuade me at every turn not to surrender the property and I was advised by others to be wary of what I signed in case they tried to recover something post bankruptcy. Every time a tried to cross off phrases from their form that I didn't like the look of, they refused to accept possession of the property. Eventually I spoke to someone at NR that assured me that there was no jiggery pokery involved in the form and that the shortfall WOULD be written off in the BR. I reluctantly signed it so that it would be recorded as a voluntary repossion, rather than enforced (although I suppose this will be of scant regard when looking for a future mortgage).

I had no real assets other than a car valued somewhere between £1750 and £2500 and a mortgaged house in negative equity. I was (and still am) employed, with a good wage.

I rented a house and moved into it before the BR. Though again, in retrospect, I would have petitioned for BR whilst still living at the old house, but with the new one ready to move into. Semantics, I suppose, but the newspaper notice listed both addresses, whereas I had wanted the new address to be untainted.

The court staff were very helpful, understanding and completely non-judgemental. I didn't even have to go before the judge, he simply signed it off. My interview with the OR was by phone rather than in person and was much less stressful than I expected, he simply wanted to know the facts of my situation, to understand how it had arisen and how much (if any) spare income I had. They took control of a term life assurance policy and all my accounts, cards etc.

I had opened a Coop Cashminder account prior to bankruptcy, which the OR agreed not to touch, though in retrospect, it would have been safer to wait until after BR. I agreed (eventually) to buy back the interest in the life policy for £50. The car (eventually) was exempt. A non-working motorbike that I had listed in my SOA as being worth £100, sold for £300 to someone who knocked on my door and expressed an interest in it. I had to give this money to the OR.

All in all the experience was fairly painless and certainly less stressful than I had expected. Though there was obviously some stress involved. This was mainly due to the fact that I had large debts, but little in the way of assets. I agreed to a payment of £50 p/m, although it took about nine months for them to actually sort out the IPA, exempt my car and offer me the life policy back.

So in short, it's not an easy option, my credit will be shot for years to come. But it was not as foreboding as I might have expected.

Hope this is of help to others in a similar situation.The best advice that I had was simply to be honest with the OR and this worked ok for me.

larzie30

Thanks for your story, its always good to know that there is light at the end of the tunnel.

terr123

larzie30 wrote: »

Thanks for your story, its always good to know that there is light at the end of the tunnel.

There are some upsides too, I particularly enjoyed sticking it up Lloyds Bank - whom I hate with a passion!

Sammy3008

terr123 wrote: »

I successfully petitioned for bankruptcy last October and expect to be automatically discharged this October.

I ended up having outgoings larger than my incomings largely due to a marriage breakdown, high maintenance payments and a business that didn't do as well as expected.

I owed about £50-60k to banks and credit cards. I managed these pretty well by robbing Peter to pay Paul and never missed payments. This was not sustainable in the long term, though. I managed to get a ubiquitous Northern Rock 125% mortgage (which I was amazed by at the time) in 2007.

I decided in the middle of last year (and after taking advice from various sources, including this forum) that this unsustainable situation would best be resolved by petitioning for bankruptcy.

I started by winding up my limited company, as (I was told) it would cause greater problems if it needed to be dealt with in my bankruptcy. I decided that I would give the house back to Northern Rock. The reasons for this were threefold: 1) It was in negative equity and the best predictions suggested it would only get worse, 2) there were some suggestions that NR might try to attach the unsecured loan element of the 125% mortgage to the property so that it would not be written off in the BR (this was probably unfounded in retrospect), 3) I wanted a fresh start at a property not associated with the BR

Northern Rock tried to persuade me at every turn not to surrender the property and I was advised by others to be wary of what I signed in case they tried to recover something post bankruptcy. Every time a tried to cross off phrases from their form that I didn't like the look of, they refused to accept possession of the property. Eventually I spoke to someone at NR that assured me that there was no jiggery pokery involved in the form and that the shortfall WOULD be written off in the BR. I reluctantly signed it so that it would be recorded as a voluntary repossion, rather than enforced (although I suppose this will be of scant regard when looking for a future mortgage).

I had no real assets other than a car valued somewhere between £1750 and £2500 and a mortgaged house in negative equity. I was (and still am) employed, with a good wage.

I rented a house and moved into it before the BR. Though again, in retrospect, I would have petitioned for BR whilst still living at the old house, but with the new one ready to move into. Semantics, I suppose, but the newspaper notice listed both addresses, whereas I had wanted the new address to be untainted.

The court staff were very helpful, understanding and completely non-judgemental. I didn't even have to go before the judge, he simply signed it off. My interview with the OR was by phone rather than in person and was much less stressful than I expected, he simply wanted to know the facts of my situation, to understand how it had arisen and how much (if any) spare income I had. They took control of a term life assurance policy and all my accounts, cards etc.

I had opened a Coop Cashminder account prior to bankruptcy, which the OR agreed not to touch, though in retrospect, it would have been safer to wait until after BR. I agreed (eventually) to buy back the interest in the life policy for £50. The car (eventually) was exempt. A non-working motorbike that I had listed in my SOA as being worth £100, sold for £300 to someone who knocked on my door and expressed an interest in it. I had to give this money to the OR.

All in all the experience was fairly painless and certainly less stressful than I had expected. Though there was obviously some stress involved. This was mainly due to the fact that I had large debts, but little in the way of assets. I agreed to a payment of £50 p/m, although it took about nine months for them to actually sort out the IPA, exempt my car and offer me the life policy back.

So in short, it's not an easy option, my credit will be shot for years to come. But it was not as foreboding as I might have expected.

Hope this is of help to others in a similar situation.The best advice that I had was simply to be honest with the OR and this worked ok for me.

Thank you for your story Terr.

We are just in the process of going BR, but looking to move into a rented property before hand.
We also at present have a NR Mortgage and an Unsecured Loan, have a together mortgage. We also are in Negative equity on our property.

May I ask, before you gave your home back to NR and before going BR, did you contact NR and let them know what you were deciding to do? My DH mentioned to me last night, we should perhaps speak to NR and explain what we're going to do.
As we are already in NE, and the property isn't worth the total we owe back to NR (£103000, including unsecured and clauses to get out of the fixed rate mortgage) I'm not sure they could try to add the unsecured loan to the mortgage?

terr123

Mine was a Together product also. No I didn't mention it to NR beforehand, only when I came to handing back the property. As I said before, I got conficting messages (presumably from different departments). They were still saying that we could come to some arrangement right up to the end. I did try to hand back the keys at a branch (which is what I was told by several people I could do) but they refused them (after scratching their heads not really knowing what to do) and referred me to someone at head office on the phone, who sent out the necessary forms.

There was some suggestion that If I kept the house (which it seems I could have done) that they may try to get me to sign something to the effect that they could pursue the unsecured element after bankruptcy or try to attach it to the mortgage. I'm not absolutely sure how true this was. If I'd have kept the house, the unsecured element would have been written off and I would just have been left with the mortgage part (even though the 5% deposit had been part of the unsecured element) which I could have bought back the interest to post BR. The property would still have been worth less than the mortgage though.

The shortfall WAS written off in the BR, but I seemed to think that there was some suggestion that if the house was not sold by the discharge, that they could come after me for some money (again I'm not sure how true this was). Fortunately the house sold a few months back.