Husband going Bankrupt, buying equity?

sillysausage1977

I would be grateful if someone could give me some advice please.

My husband has got unsecured debts which can no longer be paid for due to him being unwell at the end of last year and having to change his job to a lower paid one.

we have been paying token amounts to his debters whilst he was looking for work, now he is in steady emloyment we are looking at what our options are.

We have got a mortgage in both names and we desperately want to keep our home. We brought out house 5 1/2 years ago for £75,000, we paid a £2,000 deposit, we have got about £64,000 ish left to pay. The houses around us are selling for about £100,000. The unsecured debt is £37,000.

One of the options we were informed of from the CAB was if my husband was to go BR, I could possibly buy out the equity in the house.

Could someone tell me how this process would work, would we have to get the BR paperwork first and the process just falls into place, or do we have to go to our mortgage lender first and see if I am able to buy out the equity then complete the paperwork?

What I dont want is to have filled in the BR paperwork and the process started and then find out that Im unable to buy the equity and then lose the house anyway..

I would be grateful for any replies.

Thanks.

philnicandamy

All equity enquirys will be dealt with by the official receiver AFTER your hubbie goes bankrupt..

markandkate

It will be up to the OR to value your husbands share of the equity in the property but you should not accept that it is half of the equity. It is the value of his share on the open market ie half a house with a sitting tenant owning the other half which will obviously be less as that is not so nealry attractive to buyers.

Once you have established a price you will have to get a mortgage for the amount to pay to OR plus the outstanding mortgage. So if you agree on say £20,000 for his equity plus the outstanding mortgage of say £37,000 you will need to be able to take out a £57,000 mortgage on your own. Normal lending criteria will follow eg 3 times salary so you will need to be earning sufficient to satisfy your lender as well

its-hapnin

sorry for butting in but this doesnt sound right to me.

if the house was worth say £100k and they've £64 mortgage then the equity will be £36K. but thats half his half hers isnt it? so she would need to find around 18k . and wouldnt have to take out a mortgage on her own would she?

i am just starting the process of negotiating with the trustee in a similar matter

x

thats assuming the 37k debt is in your husbands name only. and would be written off by his BR

markandkate

The figures were just an illustration but any loan secured against the property would be in joint name and therefore now the sole responsibility of the remaining partner

its-hapnin

hi markandkate , the OP stated that its unsecured loan in her husbands name.

even so, there is still around £18k (negotiable) for her to find (loan, borrow from relatives?) to buy back the husbands share of the equity and the existing mortgage would stay in place.

i only know cos i am going through the same thing at the moment

if i am wrong would someone who knows their stuff please comment . thanks x

sillysausage1977

Hi its-hapnin thanks for your reply. £18000 sounds more of a realistic amount. If its ok could I keep in touch with you seeing as we are going through the same thing!! Everything is so confusing at the moment!!

Do you know if it was say £18,000 could I take a loan out for that amount instead of adding it to the mortgage?

sillysausage1977

Just another thing, say we went started the process of BR and then we found out I am unable to buy the equity for whatever reason can we stop the BR process, or once its started there is no going back?

Thanks.

Max_1066

The key point as mentioned above is to get an accurate valuation based upon the fact there's a sitting tenant. When mine was valued they knocked 15% off the open market valuation to get a realistic value for a quick sale (there was no tenant though).

Good luck.

markandkate

The existing mortgage cannot stay in place because the husband is bankrupt and cannot owe more than £250 so you will have to re-mortgage.

jedi82

markandkate wrote: »

The existing mortgage cannot stay in place because the husband is bankrupt and cannot owe more than £250 so you will have to re-mortgage.

Sorry this has confused me. Both me and my husband have gone BR at the end of august but have kept the mortgage going (as we will be buying back the BI). Is this different if only one of you goes br?

Jedi