Warning about property from 1st Jan 2011...

ontheroad_2

If you get an IPA, it runs for 36 months from the date the first IPA payment is made by you. If you need to get your IPA changed (ie increased, decreased) this counts, so its a maximum of 36 consecutive months you'll pay on an IPA.

I knew at my OR interview I'd have an IPA, it took about 2 months from the interview date to paying my first IPA payment.

sortinitout

I'm having difficulty understanding what any of this means. I moved out of my mortgaged property in April 2010 and went BR in May 2010. The property is in negative equity just on the mortgage amount and the price it's up for sale at and there is also a secured loan on the property. Does all this mean that the house could be returned to me? Please say no - I'm just beginning to feel like my lifes getting back on the right tracks.
The house is up for sale with 2 agents but it doesn't look likely to be sold as when we left we informed the mortgage co but they didn't do anything to the house, the thieving horrid people that lived near us broke into the house and took everything from carpets on the floor and light fittings/switchesto the boiler and fitted kitchen so the house is now in desperate need of fitting out.
After my discharge am I going to be completely shot of the house?

jamesd

Interesting. Any sign yet of people contacting ORs to find out if there's property available at current market values where the BR person can be made a forced seller in a depressed market by the OR accepting an offer above the mortgage value?

That is, any sign of people treating those who are BR in the same way as those after cheaper property treat estate sales?

FMC20

I'm facing bankruptcy and have started the paperwork.

Property is in huge negative equity and as I understand the OR could re-vest the interest back to very soon after bankruptcy.

Technical Manual from the Insolvency Service reads...

33.9 Bankrupt's home vesting in trustee and when it will re-vest

(a) 3 years from the date of the bankruptcy order [note 3]; or

(b) Earlier if the official receiver, or insolvency practitioner acting as trustee, sends notice to the bankrupt that he/she considers that the continued vesting is of no benefit to creditors or re-vesting would facilitate a more efficient administration of the estate [note 5]. (See paragraph 33.17(c)), but

(c) If the bankrupt does not inform the official receiver, or any insolvency practitioner acting as trustee, of his/her interest within 3 months of the bankruptcy order then the dwelling-house will not re-vest until the expiry of 3 years after the official receiver or other trustee becomes aware of the bankrupt’s interest [note 6] (unless paragraph 33.17(c) applies).


So as I see it if I stay in the property post bankruptcy I could have the BI vested back to me within a very short time (1 month?) and then have the negative equity problem to deal with all over again should I not be able to pay the mortgage in the future.

So - best to go for VR now?

Or have I got something wrong?

ontheroad_2

The OR guidelines changed on 1st January 2011, so that the OR will not normally consider offering the BI back to the home owner until 2 years and 3 months after their bankruptcy date. That is what this thread was highlighting, the change in the guidance.

debtinfo

Although what you FMC20 say is technically correct, it is very unlikely to happen before the 2 year 3 month period

FMC20

Thanks for the replies.

I understand that when the BI re-vests to me so does the responsibility for any shortfall if the property is sold (say after repo, if I default) and is not included in the first bankruptcy so I would be bankrupt a second time. Correct?

To try to make a completely clean start in one bankruptcy would it be best to go the VR route pre-bankruptcy or at least before 2 yrs 3 months is up?

Cheers.

TheCat_2

I'm not sure of all the technicalities but don't confuse re-vesting and Beneficial interest.

Revesting is when you get the property back by default because the OR has failed to deal with/ is unable to make a profit out of the property within the first 3 yrs. 2yrs 3mths is a nominal trigger point for the OR to revisit the valuations etc..

BI is when the bankrupt is offered the chance to 'buy' back the property from the OR. Cost will vary from £1 to the full equity value plus solicitors fees.

Under the new guidelines I understand the BI offer will not be made to new BR's until at least 2y3m have elapsed - unless there is absolutely no likelihood of the property being positive equity within 3yrs...it MiGHT then be offered early but this would be exceptional.

I've just received my AD and my property is probably -£12k, I don't want to buy the BI as in my mind this is paying £1 to inherit a £12,000 debt so VR is probably on the cards once we've found alternative accommodation. Ive spoken to the OR and they've just asked I keep them informed.

Any subsequent shortfall will be part of my original bankruptcy.

I'm not sure if buying the BI is an irrevocable action so we'll need an expert to answer the question....

'if you buy the bi for £1 on a neg equity property and the Market doesn't improve can you change your mind and subsequently gift the prop back to the OR (say within the first 3 yrs) so a VR and clean slate can be achieved?'

silvercar

I'm not sure if buying the BI is an irrevocable action so we'll need an expert to answer the question....

'if you buy the bi for £1 on a neg equity property and the Market doesn't improve can you change your mind and subsequently gift the prop back to the OR (say within the first 3 yrs) so a VR and clean slate can be achieved?'

I'm not sure of the answer, but I think your question should probably be phrased:

'if you buy the bi for £1 on a neg equity property and the Market doesn't improve can you change your mind and hand back the property to the lender - voluntary repossession, can the negative equity be included in your original bankruptcy?'

silvercar

sortinitout wrote: »

I'm having difficulty understanding what any of this means. I moved out of my mortgaged property in April 2010 and went BR in May 2010. The property is in negative equity just on the mortgage amount and the price it's up for sale at and there is also a secured loan on the property. Does all this mean that the house could be returned to me? Please say no - I'm just beginning to feel like my lifes getting back on the right tracks.
The house is up for sale with 2 agents but it doesn't look likely to be sold as when we left we informed the mortgage co but they didn't do anything to the house, the thieving horrid people that lived near us broke into the house and took everything from carpets on the floor and light fittings/switchesto the boiler and fitted kitchen so the house is now in desperate need of fitting out.
After my discharge am I going to be completely shot of the house?

If the property has been repossessed or you've handed the keys back (voluntary repossession) then any negative equity will be included in your bankruptcy PROVIDED YOU HAVEN'T SIGNED ANYTHING POST BANKRUPTCY ACCEPTING LIABILITY FOR THE SHORTFALL. This applies to any shortfall on the original mortgage and any secured charges.

The thieves are a matter for the current owner ie the lender. (Actually its a matter for society at large, but you get the picture.)