Neg Equity Future

script

Just a bit of a twist on my question I asked earlier - and again I think I know that the answer is No.

You go B/R today.

The house has no equity - and you intend to stay and are likely to arrange a BI of £1.00.

But during your B/R you decide to sell or can't pay the mortgage and the house is sold or repo'ed.

And there is a shortfall.

I'm guessing in that situation the negative won't be included in your B/R.

Because the debt is "technically" a new debt.

peachyprice

No, that's not so, the debt was provable at the time of BR, and will remain so. It will always be included in your BR, even after discharge.

It would only become a new debt if you were to re-mortgage.

script

Wow - I never realised that.

So even although during your B/R you never intended to sell the house - you fully expected to be able to pay the mortgage (again there was no equity but you did arrange a BI for £1).

But again during your B/R things changed - the mortgage became unaffordable.

You could then sell the house or have it repo'ed and the shortfall would be included in your B/R.

Of course all this would have to happen during your B/R.

And if so the shortfall would be included?

debtinfo

yep, only new credit would not fall into the bankruptcy, either a remortgage or a secured loan.

peachyprice

script wrote: »

Wow - I never realised that.

So even although during your B/R you never intended to sell the house - you fully expected to be able to pay the mortgage (again there was no equity but you did arrange a BI for £1).

But again during your B/R things changed - the mortgage became unaffordable.

You could then sell the house or have it repo'ed and the shortfall would be included in your B/R.

Of course all this would have to happen during your B/R.

And if so the shortfall would be included?

This still applies, even after discharge, not just while you're BR but for as long as the original mortgage stands.

Which is why I get really really angry with some CCCS and CAB advisors who have advised members here that they should give up their house if they're going BR, even if they can afford the mortgage.

You're in a win-win situation and it's really foolish to give up an affordable house when you're protected should your circumstances change and you can no longer afford the mortgage at a later date.

wayforward_2

Wow - is this also the case if you have purchased the BI?

peachyprice

Yes. Buying the BI doesn't change the fact that the mortgage is a provable debt in your BR.

script

It's seeing those answers - that makes me so glad I asked the question.

Thanks so much