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My BROTHER IS GOING BANKRUPT HOW WILL THIS AFFECT JOINT BTL MORTGAGES.

My brother is thinking very seriously about going bankrupt due to some bad property investment made during the good times. My brother and i have 4 joint BTL mortgages, which are probably all in negative equity. How does his bankruptcy affect me and these BTL mortgages? Do i have to take on the full mortgages myself or can i buy out my brothers share at current market value, which i would do if the bank will let me. Any advice is very welcome.

Comments

  • DarkConvict
    DarkConvict Posts: 6,338 Forumite
    1,000 Posts Combo Breaker
    edited 3 April 2010 pm30 10:17PM
    If he goes BR, you become liable for the mortgages in full.

    Say you have 4 x £100,000 mortgages, "you consider yourself to owe £200,000"
    You will now solely owe £400,000 in mortgages.

    This applies to any joint accounts he hold, the debts goto the other account holder(s) to pay. As it releases only his liability to pay debts. All joint accounts have the clause that all named account holder(s) are liable for the debt in full.

    This is the general cases, although there are alot of rules about it. Most likely the houses will get a CO or be sold. And the shortfall is what will be owed.
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  • debtinfo
    debtinfo Posts: 7,012 Forumite
    Debt info has dealt with the liability issues so i will add this. The trustee in the bankruptcy will be entitled to receive half of the rent from the tenant and is under no onligation to use this to pay the mortgage. The OR is not obligated to let you buy the beneficial interest back as it is not a family home so you will have to make an offer that the OR would be unwise to turn down
    Hi, im Debtinfo, i am an ex insolvency examiner and over the years have personally dealt with thousands of bankruptcy cases.
    Please note that any views i put forth are not those of my former employer The Insolvency Service and do not constitute professional advice, you should always seek professional advice before entering insolvency proceedings.
  • immoral_angeluk
    immoral_angeluk Posts: 24,506 Forumite
    10,000 Posts Combo Breaker
    It's also worth mentioning that as you have joint finances, and therefore a financial association on your credit file, his going BR will have a negative affect on your credit rating, which may cause problems if you need to remortgage the properties.
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  • DVardysShadow
    DVardysShadow Posts: 18,949 Forumite
    debtinfo wrote: »
    Debt info has dealt with the liability issues so i will add this. The trustee in the bankruptcy will be entitled to receive half of the rent from the tenant and is under no obligation to use this to pay the mortgage. The OR is not obligated to let you buy the beneficial interest back as it is not a family home so you will have to make an offer that the OR would be unwise to turn down
    True. Although all OR has is half shares in 4 properties where the mortgage is all on johnjazz. And the mortgage deeds allow the lender to claim back their full equity. OR's half shares are worth far less than half market value of the properties, because firstly there is probably very little equity to mortgage and secondly, if johnjazz defaults, then anyone buying the half shares would stand to lose everything.

    The right offer is probably half of the unmortgaged equity in the properties?
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  • debtinfo
    debtinfo Posts: 7,012 Forumite
    yes but the OR doesnot have to do anything with them and so would be quite happy to sit there collecting the rents if their is little or no equity
    Hi, im Debtinfo, i am an ex insolvency examiner and over the years have personally dealt with thousands of bankruptcy cases.
    Please note that any views i put forth are not those of my former employer The Insolvency Service and do not constitute professional advice, you should always seek professional advice before entering insolvency proceedings.
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