When to start proceedings?

cottlad

Hi,
My wife and her ex partner have a mortgage shortfall of £22k + expenses. Our circumstances are a little strange including the ex having no money and a terminal illness and are detailed in a previous thread: https://forums.moneysavingexpert.com/discussion/comment/36205165#Comment_36205165
We have tried bargaining with the lender and have asked for a final settlement figure but they refuse to budge. They insist that the full shortfall would still be owed after completion. They said their collections team would treat it as an unsecured loan and they would try and come to an amicable repayment agreement.

This morning we visited CAB and they told us that bankruptcy is a very valid option and they would advise that route unless the bank offered an alternative (owing them £22k+expenses not being one.)

We have explained to them we have had an offer for the property and that the offer is still on the table. They seem happy to accept this offer and offer us a shortfall agreement after completion. With that said, they have issued my wife with a 'Power of sale scheme' form to complete and sign. This basically is an agreement that we are happy for the lender to let us sell with a shortfall and then owe the remaining to them after the sale goes through.


So.... we have decided that we should try and get the house sold at the offered price and then regretably have my wife file for bankruptcy, as advised.

My question is regarding the order of proceedings. CAB have told us they would help with bankruptcy details but didn't advise exact route to follow.

The things that will hopefully happen (please correct me if wrong) will be i) power of sale scheme form to be completed and attached. ii) offer on house accepted. iii) Sale of house completes and we vacate property iv) lenders approach my wife with the shortfall and discuss repayment terms. v) My wife starts bankruptcy proceedings.


Our questions are regarding the order.
1. Are there any other options she should consider?
2. Can/should she she start bankruptcy before the sale completes and they approach us with shortfall terms or do we have to go ahead as if selling and accepting the shortfall post sale and then go for bankruptcy only when they approach us to agree terms on the shortfall?
3. Would it be easier for us to just walk away and have the property re-possessed and then file bankruptcy when they cahse us?

Any comments would really help us. The way the CAB guy was talking it sounded like we should go back and see them if the lender doesn't want to play ball and start bankruptcy but can someone file for bankruptcy when there isn't yet a fixed debt amount to cover?

cottlad

Can anyone maybe just confirm that the steps are as follows:

1. Sign and return power of sale scheme form
2. Await confirmation we can sell to offerer
3. Accept offer
4. Complete sale of house
5. Await lenders asking for terms for the payback of shortfall
6. Agree shortfall terms or possible bankruptcy if situation unchanged

Cheers

confused76

i haven't been through this process myself with a house sorry, but someone will be along shortly

cottlad

Any takers? We're having my wifes ex sign the form tomorrow and will be posting it. Would hate to be doing the wrong thing that may jeapordize future plans.

Cheers

cottlad

Blimey 173 views and not a sniff I feel all dejected now
I hope we did right by filling in the form. Hopefully we can get the house sold then deal with the aftermath of the shortfall. Am i right in thinking my wife can only go bankrupt once the lenders approach us with the shortfall amount after sale? Anyone who may have any advice we'd be really grateful

[Deleted User]

Hi cottlad
don't feel dejected, it seems like you have a complicated situation so perhaps folk don't feel able to offer anything constructive
If you're not sure of the advise from CAB perhaps approach one of the other free charity services - ultimately only you can decide what's best for you and you need to be sure first.

FWIW - I had to go br and there is a property involved, I know to never ever sign anything after br that might create a liability to pay ml, apparently before br it's not so important.
I also wonder that if you do take on the shortfall knowing that you'll go br might not be looked on favourably by or

lbm

cottlad

lbm wrote: »

I also wonder that if you do take on the shortfall knowing that you'll go br might not be looked on favourably by or

lbm

Thanks for reply

This worries me somewhat also. But we can't actually get permission to sell with a shortfall unless we sent the form back. Anyone else any ideas?

confused76

i haven't heard of this being a problem, but hopefully someone else can confirm. as said above, definitely do not sign the shortfall acknowledgement after br no matter what the mortgage co say...

i think people are cautious to advise if they haven't been through it themselves so sit tight you will get your help