So now they tell me the OR won't be interested in our house??!

CanItGetWorse

Hubby and I were declared bankrupt on Thursday. All a bit sad and some of you may have read my thread on how terrifying the experience was for me.

So before we went bankruptwe were advised by our local CAB to try to secure a rental property as obviously as homeowners the OR would want to sell our home. We have found one, signed a lease and are moving in next week.

Then yesterday we got a call from the OR's office to confirm some basic details before tne OR speaks to us next week. At the very end of the call the lady says 'oh, and what are you planning on doing with your home?' we say we thought they would take it and deal with it. Apparently not! This woman said the OR would not be interested in our home as it is innegative equity (by about £11000).

Does this mean I could've stayed there all along!?
I thought our mortgage was counted as part of our bankrutcy! But when I rang tne mortgage company they wern't interested in the bankruptcy, just as long as we kept paying the mortgage!

Theirs no way we can afford rent AND mortgage. Does this mean we have to deal with more legal issues? Bailiffs and nasty letters to get the house reposessed? Will I have to go to court? If I don't go will I go to prison? (spiraling now but pregnant and hormonal!)

confused76

hi there
if you were to stay in your house, can you afford the mortgage?
i don't know the legalities of signing a lease then backing out of it, might be worth posting on the house buying, renting and leasing section to get their take on the rental agreement... http://forums.moneysavingexpert.com/forumdisplay.php?f=16
good luck x

fermi

Your local CAB got it wrong I'm afraid.

You can stay, as long as you can pay the mortgage.

The mortgage is not a bankruptcy debt. The only way it could be is if you let the house be repossessed, the house is then sold for a shortfall on the mortgage. That shortfall, once it exists as an unsecured debt, would be covered by the bankruptcy.

Question:

Can you afford the mortgage?

Do you want to? i.e. are you staying for the long terms where you are likely to get out of negative equity? If not, then it may actually be a good idea to let it go.

As said, if you want to stay then you will have to investigate the legals of cancelling the new lease.

When did you sign that? before or after your BR date? If before, then it would be worth checking with you OR to see if that itself could be an obligation that would be covered by the BR if you decide to cancel it. (Not sure if it can be).

kittiej

What does the lease say about going BR?

If you wanted to stay in your home and can afford the mortgage then maybe telling the LL could be a way to get out of the lease early?

CanItGetWorse

I will check the lease, at the moment it's in our new house. I'm really torn, I feel secure in my home, and as the (interest only) mortgage payments are the same as the rent we could afford to live here. But the mortgage tracks 2% above the base rate, not a problem now, but who knows what will happen when the rates go up? I have a lovely family member who is willing to pay off the rent in order to let us stay in our home, but the rental house is better situated in some respects (and is larger!)
DH seems pretty determined still to move, but I don't know if I can face all the hassle of the reposession, will I have to pay the mortgage lenders legal fees? I know the shortfall is covered by the bankruptcy. Will I have bailiffs at my new house or have to go to court?

fermi

CanItGetWorse wrote: »

will I have to pay the mortgage lenders legal fees? I know the shortfall is covered by the bankruptcy. Will I have bailiffs at my new house or have to go to court?

No. As long as you now don't sign anything to say you are liable, then the shortfall, legal fees, and lender's costs will fall into the bankruptcy.

Be careful though. Most lenders WILL try to con you into signing something to make you liable again.

Bailiffs may be used to take possession of the property, but that's not your problem. You won't be there, and all they will do is clear anything and arrange for locks to be changed.

debt_doctor

fermi wrote: »

Your local CAB got it wrong I'm afraid.

Did the CAB adviser ask you how much you thought you property was worth, and did you say it was in negative equity?

If the answer is yes, then the CAB did most definately fail you. That adviser will be equally failing others, past and future.

I appreciate that it could all be 'yet another pressure' but you should (if the answer to my question is "yes") consider making a complaint and possibly a claim against their insurance if you suffer financial detriment as a result.

As for good advice, I would listen to what Fermi has already given to you. I completely agree with it.

DD

fermi

debt_doctor wrote: »

Did the CAB adviser ask you how much you thought you property was worth, and did you say it was in negative equity?

If the answer is yes, then the CAB did most definately fail you. That adviser will be equally failing others, past and future.

No offence DD, but if the advisor failed to ask such basic question, then they simply failed in a different equally big way.

If you see what I mean...

debt_doctor

fermi wrote: »

No offence DD, but if the advisor failed to ask such basic question, then they simply failed in a different equally big way.

If you see what I mean...

If extensive questions are not asked / answered about property in any form of debt advice (never mind the proposed remedy) then the whole advice is invalid and potentially disastrous.

DD

Arwen

As someone who works in the Money Advice sector myself, I am HORRIFIED that an advisor should fail to ask such a basic question. I would never ever advise a client to go BR without asking for a mortgage statement and having the house valued (where possible).

I would make a complaint to the agency involved.They should be insured against negligence, and this is what it is.