What will happen to the house

KITTENPOP9

Hi everyone, just a question regarding the house now we have been declared bankrupt. Part of the the mortgage agreement with Northern Rock was for an unsecured loan for about £4500 which we put down on our forms. We still then have the mortgage with them for about £90000 but believe the house is in negative equity and only worth about £85000. We are fully up to date with all the mortgage payments and can currently afford the payments. Just a little confused as what will happen with the house?

Regards Kitten

debtinfo

Hi about 6 weeks after your interview you should get e letter offering the BI (Beneficial Interest) back to you. You will need to go get a mortgage statementa and a valuation of the property. If it is in negative equity you can usually buy it back for £1 plus legal costs

KITTENPOP9

Thanks debtinfo. But what would the legal costs be? as we have no disposable income left for other things. What would happen if we didn't buy back the BI?

IF

Hello KP, can only say what DI has said, get a few valuations now so you can have a rough idea what negative equity you have. Legal costs are normally £211. Can anyone lend you this?

debtinfo

If the house is solely owned the legal costs would be £470, if it is jointly owned the fees are £211.

If you dont buy the BI back
Since the property is in negative equity, nothing will really happen at the momemt, it is not in the OR's interest to sell it. The OR has 3 years to deal with the property, so the OR will put it on the back burner for 2 1/2 years and then look at it again. They will offer it to you again for whatever it is worth at that time, if you dont want to buy it then and there is a significant amount of equity they may get an order of sale, if there is only a small amount of equity they will get a charge on the house. if there is still no equity the property will revert back to you at the end of the 3 years

KITTENPOP9

Thanks for the advice unfortunately havn't got anyone to borrow the money off so don't think we would be able to buy back the BI. At least it's a relief that hopefully we can keep the house for a while.

Regards Kitten

KITTENPOP9

Hi again sorry to be a pain but we have another question. As money is so tight with us at the moment we were wondering if the mortgage payments went back up as we are on the variable rate, what would happen if we then couldn't afford to pay the mortgage. If the house was repossessed would we be liable to pay the shortfall between what we owe on the mortgage and what the house would be sold for?

debtinfo

no, as long as you dont sign anything accepting liability any shortfall will always fall into the bankruptcy

KITTENPOP9

Sorry to sound stupid but does that still count if you have then been discharged before you were repossessed?

debtinfo

yes, even if repossessed after discharge the shortfall will fall into the bankruptcy

KITTENPOP9

Thanks so much debtinfo your advice has been a big big help in what are very confusing times.