Advice on way out please.

silvercar

He's been on the CCCS website and it recommended bankruptcy:(. Second option was a DMP, it suggested that it would take 41 years to clear his debts if every creditor agreed to stop charges and interest.

His only asset are his home in negative equity and the wife's car but the outstanding finance is greater than the value.

Question that I couldn't answer: If the home is in negative equity just from the outstanding mortgage, would the secured loan people repossess if he stopped paying them? If they repossessed they would get nothing, so logic suggests that it wouldn't be worthwhile repossessing, but I don't know if it is logical.

If he went bankrupt but kept paying the mortgage, what happens to the secured loan. I know it isn't written off in bankruptcy but would they repossess to get nothing?

silvercar

Anyone around?

Latest is that his work will be supportive and help him try and sort through the mess and his job is safe if he goes bankrupt.

Sat down with him and worked a way forward but it relies on his mortgage going interest only and his wife getting a job. That will give him some money to pay off some of the debt on his credit cards. Otherwise the only serious option is bankruptcy.

He thinks CCCS told him that even in negative equity he could lose his home as his repayment mortgage payments are much higher than rent would be?? Not sure if he got this right as his home is a 3 bed semi - not unreasonable with a wife and one child.

If anyone can answer this:

If he went bankrupt but kept paying the mortgage, what happens to the secured loan. I know it isn't written off in bankruptcy but would they repossess to get nothing?

dancingfairy

Hi Silvercar I don't know the answer to your questions but hopefully someone with more experience will be along to help so giving you a bump.
Good Luck - I hope you can help your friend it sounds like he is having a really rough time of it.
df

JCS1

He needs to think over the house situation. Over 50% of his basic income goes on the mortgage and secured loan. What would a similar property in the area be if he rented?

The other issue is that if it is a lot more than rent, the OR may limit the amount allowed on his SOA. If this did happen, then he could make the full payment from his excess but depending on figures it might then become a balancing act issue.

Not sure what the secured loan people would do if he stopped paying, but I'm guessing that they would chase for the amount fairly heavily.

silvercar

JCS1 wrote: »

Not sure what the secured loan people would do if he stopped paying, but I'm guessing that they would chase for the amount fairly heavily.

I think that is what it all hinges on. If the secured loan people can't repossess because the main mortgage is greater than the property value, he really could try and go interest only on the main mortgage and tackle his debts.

If the secured loan payments have to be prioritised and his mortgage is repayment, there is never going to be enough money to clear the debts. Every month his capital mortgage repayment and secured debt payments will mean he can't tackle other debts and he will never get to see anything for them.....at least for the next 41 years!

Windsurf

Hi Silvercar,

My only (opinion) comment would be that going bankrupt would be better for his wifes Mental Health. My mental helath issues have improved dramatically since going bankrupt, me and OH dont argue about stupid petty things any more It turns out we was taking out all our anger and frustration on each other which drove a massive wedge between us which has dissolved since Bankruptcy and now we are free to get on with our lifes.

I feel for him I hope it all works out whatever he decides to do. This site helped me so much just reading other peoples posts...

Windsurf

silvercar

Windsurf wrote: »

Hi Silvercar,

My only (opinion) comment would be that going bankrupt would be better for his wifes Mental Health. My mental helath issues have improved dramatically since going bankrupt, me and OH dont argue about stupid petty things any more It turns out we was taking out all our anger and frustration on each other which drove a massive wedge between us which has dissolved since Bankruptcy and now we are free to get on with our lifes.

I feel for him I hope it all works out whatever he decides to do. This site helped me so much just reading other peoples posts...

Windsurf

Windsurf, I wish you well. Your views are interesting, my friend thinks that losing the home will destroy his wife and so he is desperately trying to find a way to avoid bankruptcy to keep it.

kepar

Regarding the mortgage and secure loan , we were in the same situation as in they were above the average house rental in the area. The OR only allowed us the average rent and if we wanted to stay we had to to make the rest up out of any spare. We tried for two months and realised we had no spare money, and we were going to end up as prisoners in our own home.
We made the difficult decision to give the house back, the mortgage was covered by the sale, and the secure loan went into the bankruptcy.
Fighting to keep you hose is one thing, but how are you going to feel 2-3 years down the line, when you have no spare cash and repairs need doing. You cannot sell because you are in negative equity.
Have a look around your area in local papers for places to rent, we found a nicer house in a nicer area than we were living. This is why we moved, the OR will be generous but not overly, as if he reduces your mortgage/secure loan to say £11-1200 the you will be liable for an IPA.
Losing your house is not the end of the world, being trapped until the mortgage is paid is. Your wife's health may suffer short term, but I am sure if you stay she will get worse.
My wife suffered a breakdown, with the thought of moving, but 5 months into our rented house she was better than ever. Now 20 months later she agrees it was totally the right thing to do.

silvercar

kepar wrote:

Regarding the mortgage and secure loan , we were in the same situation as in they were above the average house rental in the area. The OR only allowed us the average rent and if we wanted to stay we had to to make the rest up out of any spare.

That explains it. All depends whether the mortgage lender will allow a move to interest only and what possible action the secured loan people take.