Volutary repossession then bankruptcy

davegreen

Hello this is my first post here and i'll get straight to the point to see if any of you can help me. I have a mortgage with Northern Rock, it's a together mortgage, £95k mortgage £14k unsecured loan. The house is a cluster 2 bed which my family has outgrown, we bought it for £109k 3 and 1/2 years ago, it's now valued at £104k-£106k. I am as a married couple, in a lot of debt. I have a ccj which the creditor has permision to apply for charging order for £10k on my property, but hasn't applied yet. I have other debt up to £32k via credit cards, loans, store cards etc which are currently accepting reduced payment plans. Some have not agreed though and will soon be pursuing court action.

Anyway, I have 31+ years left on the mortgage and the ccj will take 17 years to clear, I have to have one of my children sleeping in with us as the second bedroom only fits a cotbed in and they are too small for bunks being 1 year and 2 years 3 months. The house is too small and has no garden, quality of life is crap at mo. We come out of fixed term next year and can only can imagine how crappy the new mortgage repayments are going to be. I'm currently paying a combined £622 a month for which my neihbour rents £450 a month, its ridiculous really.

Anyway, me and my wife have been looking at going bankrupt and have spoken to debtline and cab, they helped me do a budget sheet, set up basic bank account and write letters to agree with creditors etc. I have not discussed with them about the house yet because I have cancelled my phoneline and do not have a mobile and am using internet at work at mo during lunchbreak. Though when I discussed bankruptcy with cab they said an IVA would be better because it protects the home. I do not want to protect my home though as I hate it and can't live here anylonger.

It just so happens that my parents have moved into another house that they have inherited and have offered me their old house to rent off them. It will all be officlal with contract etc... Rent will be cheaper being £500 and council tax is 20 quid cheaper a month. It's a 3 bed which I really need and has garden etc and is closer to my place of work, so I could even get rid of the old rust bucket that is my car if I needed. This house is available to me from mid may as it is being done up, If I do not wish to rent it, they say they will sell it, and no before you ask I am not asking them for money to pay off my debts. They do though know of my situation and accept that I may go bankrupt while renting the property from them.

So, my question is what do I do, I have contacted a quick sale agency to see if they can offer me enough to cover the £95k mortgage, but do not believe they would offer enough. Other than that I would stop paying the mortgage and start paying rent, my parents have offered to give me a couple of months to save up for bankruptcy fees before I pay first rent. What happens with a mortgage shortfall? For example if I moved and stopped mortgage would I wait for them to auction the house and come to me to say how much I owe them, then go bankrupt? Would bankruptcy cover mortgage shortfall? Do I still have to pay council tax for the mortgage property as well as the rented one? If we aim to go bankrupt do I stop paying all debts, so I can file quicker, who else can I speak to? Would I be advised against this? I really need to move, can't have kids growing up sleeping next to mum and dad on z-bed. It reminds me of charlie bucket in Willy Wonka at momment.

beentheredonethatstilhere

If you went through a quick sale agent then you could possibly seen as disposing of an assett below value.

If you are definatly going bankrupt then I would stop paying the mortgage now and save the money for your fees etc.

You can go bankrupt before you know the final amount, it will be included in your bankruptcy.

National Debtline are really good and if they have advised you to go bankrupt then they are usually right.

There is a sticky about houses at the top of the board.

https://forums.moneysavingexpert.com/discussion/2219559

Also read through the Bankruptcy Help sticky, click on the link in my signature.

The mortgage co. can chase you for the money until the house has been repo'd but you just let them get on with it.

You let the council know that the house is empty and they will ive you an exemption for 6 months. If the house hasn't been repo'd before then, most councils will just charge 50% CT.

Yes, if you have made the decsion to go bankrupt then stop paying everything except utilities and essential bills.

leigh83

Hi I am in a similar situation, and would love to know how things are going? I am contemplating bankrupcy and hate the house i live in. its to small for my family.

nudenut0121

I'm in a similar situation i brought my house at the top end of the housing market price increase of 2007 now worth 20k less and even less once it's a repo as they sell it at auction for what they can get,the shortfall goes into the bankruptcy.i can only tell you what i intend you have to choose for yourself after the advice of others and debt charities.
I stopped paying my mortgage 3 months ago now,in the hope of saving up my br fees i believe that it could take over a year for the house to get repo so after my br i'm phoning the council and getting the c/tax exempt for six months as it won't be furnished or used,moving and only paying my essential dd's.

adfax

The only thing I would add to this is that if you are looking at BR and getting the house reposessed, it is best to default on the mortgage and wait for the building society / bank to reposess the house, rather than voluntary reposession. If you give the house back, then technically you have made yourself homeless, and therefore the local authority it not obliged to rehouse you.

If your house is reposessed due to not being able to afford the mortgage, then you have been made homeless and the local authority will be obliged to rehouse you.

And under no circumstances - repossesion or voluntary possesion - sign anything. They can take the house without your signature, whatever they might say!

We_Are_The_Mods

Definitely stop paying the mortgage. It was just under a year between me stopping my payments and the house actually being repo'd, so all the money you would put towards the mortgage put it towards moving out or the BR fees instead.

craigos74

I was in the same situation, almost two years ago now. I had a 1 bed flat, about £25K neg equity and about £40K of other debt including a secured loan. I rented out a new house, went BR and posted the keys back to the mortgage company (in that order). Nearly two years on, I'm discharged, the flat sold with a £26K shortfall that went into the BR. I had a few bad letters and dodged a few phone calls, just ignored them all and they stopped about three months into the BR. I'm now in the process of putting my credit file right. I was a tough decision at the time but life is so much better now, I've never looked back.

hardtimes88

Hi

Myself and my wife are in a very similar position. We have been struggling with a mortgage two secured loans, loans, credit and store cards etc. We were really coming to the end of our tether and in the end we bit the bullet and went to the CAB.

That was the best thing we have done, the guy was great and really understanding and ran through everything. My mother has a property that we are happy to rent, we told the man at the CAB this and his words were, "why aren't you living there then?".

We have filed for bankruptcy and went to the court this morning. The judge was fantastic and really understanding. Once he had signed and stamped the forms he told us to relax, take a breath and stop worrying, and to go and get on with our lives.

We still have a way to go, but for the first time in I don't know how long we can see the light at the end of the tunnel.


Good luck and hope you get sorted.:)

Worcsman

Our circumstances were different, our mortgage payments were around £1800 a month, I had a well paid job working overseas but hated it, I wanted to be home with my family but needed to work away to pay the bills, we had 2 houses plus an appartment I rented in Copenhagen, anyway, I gave it all up last year. I moved out my house before I went BR, we rented a nice place in the countryside, my credit reference at that point was excellent, we sold everything we could, spent the cash on rent payments and told the mortgage company that I was voluntarily surrendering the house back to them and that I was now a BR.
They refused to take the house unless I signed their forms to say I would be responsible for the shortfall. I didnt sign and so a few days ago they have started reposession against me. Like I even care, we havent lived there since October last year. But they have heaped on interest and missed payments every month since.
Plan carefully is all I will say, we got out of our house in advance of BR, we planned where we could and so far, so good. We are happy but are driving around in a 2001 banger. Until I am discharged.. Then the pain will begin to ease, or at least we can buy a decent motor without the OR wanting it to give to LloydsTSB.

credit_crunch

i know this goes back to july but hopefully someone will see this :-)

if you go BR & your house will eventuallybe repossessed - how do you know the amount of shortfall for you negative equity (as it will be in my case)?

i heard if you go BR & estimate £50k negative equity, then say the house is finally sold 6 months later at £60k loss, your BR then restarts for another 12months to cover the £10k under estimate?

finally is it true that if ur car is valued at over £2k they can take it to pay towards ur debts?

I appreciate it probably doesn't make much sense the way I have worded it but hopefully someone will catch my drift ;-)

MichMoor

I have been informed that you can place the mortgage details on the form and unknown shortfall, as long as you do not aknowledge the debt after bankruptcy it will go into the bankruptcy.
I believe your car can be taken if the value is deemed excessive, also depends if you need a car for work etc.