Bankruptcy, repossession or both?!

Maxnana

Hi,

I have posted on here before and received really good advice/support. Since my last postings we have been just plodding on trying to pay all the bills and live a decent life. However, I am really, really tired now of us just working to live, with nothing left over to actually 'live', if you know what I mean?

I have in the past asked about the possibility of keeping our house if we went bankrupt. I am now at the stage where I'm thinking is it really so important to hold on to it?

Our situation is this:

• We have a mortgage of £65,000; 2nd mortgage with a different company of £100,000; the house has just been valued at £125,00 (so obviously 40 grand negative equity)

• We have been in an IVA for a couple of years and are struggling to pay that (they - Payplan - are looking at reduced payments for us, but it will be no more than £100 less than we already pay - not much help)

The big problem is the monthly payment to the 2nd mortgage company (First Plus) as it is £1000 a month - this is what kills us financially.

I have always enquired about bankruptcy really, as that is what I thought the answer was, but now I'm wondering if that would actually help us much as we'd still have the mortgage and 2nd charge to pay, amounting to £1500 a month. (going bankrupt on the unsecured stuff would only save us about £250 a month).

Can anyone advise me of what it would be best to do? Should we just hand the keys back to the mortgage company and rent, but not go bankrupt? Should we let the IVA fail and let them make us go bankrupt or petition for our own bankruptcy, and keep trying to pay the secured loans? Should we do both???

I am so confused about the options. We have spoken to CAB, CCCS and the Debt Advice Foundation, but the consensus seems to be - when you've decided what to do, call back and we'll help you through it. I just want to know what is BEST for us to do in our situation.

I just want to get out of this depressing vicious circle we've got ourselves into and stop just surviving and start living again.

I'd be so grateful for any advice or to hear the experiences of other people who are/have been in a similar situation, and how they have dealt with it.

Anything really, to help me see a glimmer of light at the end of the tunnel.

Thank you.

kepar

We were in the same position as you regarding a 2nd mortgage. If you give up your house without going br you will owe Firstplus £40k+ and they will come after you.
We tried to keep paying both after br, but two months later realised it was a hopeless cause. There was going to be no light at the end of the tunnel just years and years of misery. So after realising that it was just bricks and mortar we found somewhere to rent and sent the keys back to the 1st mortgage company. Four/five months later the house sold.

Now well over two years later we are much happier, although renting and will be for some time, we hoe that one day we will be able to get our own house again.

Another thing to think about, the OR will only allow you the average rent for the area, if you are paying £1500 and the average is only £800 , where are you going to make the rest up from, it would be impossible to do.

freddy911

Maxnana wrote: »

Hi,


Can anyone advise me of what it would be best to do? Should we just hand the keys back to the mortgage company and rent, but not go bankrupt? Should we let the IVA fail and let them make us go bankrupt or petition for our own bankruptcy, and keep trying to pay the secured loans? Should we do both???

I think your the only ones who can really answer that question, what it comes down to is, is the house really worth it to you to keep? Thats one hell of a shortfall. If you went BR and hugn onto it and if you were lucky and house prices pick up in the next few years if the house re-made the shortfall you then run the risk of the OR taking it anyway, if it gets any equity in the following 3 years after BR.

Maxnana

Thanks for your replies.

If you give up your house without going br you will owe Firstplus £40k+ and they will come after you.
We tried to keep paying both after br, but two months later realised it was a hopeless cause. There was going to be no light at the end of the tunnel just years and years of misery. So after realising that it was just bricks and mortar we found somewhere to rent and sent the keys back to the 1st mortgage company.

So Kepar, what you're saying is, if we do anything we should do bankruptcy first, find somewhere to rent, then hand the keys back so we don't end up owing First Plus lots of money?

Sorry if I'm sounding stupid - but I really am when it comes to this sort of thing!

freddy911

It doesnt matter what order you do it in, once the house is repoed the shortfall will be included in your BR, the important thing is not to sign anything after your BR date accepting liability for the shortfall, if you do this they can persue you for it.

Finding somewhere to rent will be easier pre BR.

Maxnana

Ok, thanks. Also, which would be the best way to go about things:
re: bankruptcy - petition for bankruptcy ourselves, or let the IVA fail and then Payplan will do it
re: repossession - hand back the keys, or just stop paying the mortgage/2nd charge and wait for the lenders to repossess
And which order would it be best to do those things in?
I'm just trying to get my head round how best to go about things - I know deep down what has to happen (if we ever want our lives back), just don't know how best to go about acheiving it.

freddy911

Not sure with an IVA, I belive you cannot petition yourself with an IVA I may be wrong though, someone more knowledgeable will confirm later im sure. The problem with handing back the keys, or voluntary possesion is that the mortgage co will want you to sign an acknowledgement of the shortfall, basically accepting responsibility for it, I belive this is ok to do before your BR as then when you go BR this shortfall now an unsecured debt will go into the BR. If you do this after your BR date then you then become libel for the shortfall and you can be chased for it. Safest bet is let them take the house before BR, or hand back the keys then go BR, but if you need to go BR urgently due to hassel from the creditors or because your IVA has failed and they are making you BR then its no big loss if the house is repoed after your BR date, as long as you dont sign anything, once the house is sold the shortfall will then form part of the BR.

live'n'learn

The problem with going Bankrupt then looking for private housing causes a problem as it seems that people who go bankrupt have much more of a problem getting private housing than those who do not!

We are doing it different as we plan to go private then bankrupt which I hope allows us to get a good 6-12 month rental!!

tigerfeet2006

If you do plan to go BR and get rid of the house then the best way to do it is stop paying mortgage and any secured loans and debts, save the money for deposit, rent, moving costs and bankruptcy costs. Find a rental, move a d then go BR.

It is easier to get a property without the BR on your credit file.

kepar

If you do this after your BR date then you then become libel for the shortfall and you can be chased for it. Safest bet is let them take the house before BR, or hand back the keys then go BR, but if you need to go BR urgently due to hassel from the creditors or because your IVA has failed and they are making you BR then its no big loss if the house is repoed after your BR date, as long as you dont sign anything, once the house is sold the shortfall will then form part of the BR.

Totally wrong, the mortgage pre-dates the bankruptcy, so any debt incurred through a shortfall will go into the br. You can do this any time after br, just do not sign any paperwork admitting responsibility for shortfall.
As stated earlier as your house sale will cover first mortgage send keys to them, they will be happy as they will get all their money. First Plus as in my case went with nothing.

freddy911

kepar wrote: »

If you do this after your BR date then you then become libel for the shortfall and you can be chased for it. Safest bet is let them take the house before BR, or hand back the keys then go BR, but if you need to go BR urgently due to hassel from the creditors or because your IVA has failed and they are making you BR then its no big loss if the house is repoed after your BR date, as long as you dont sign anything, once the house is sold the shortfall will then form part of the BR.

Totally wrong, the mortgage pre-dates the bankruptcy, so any debt incurred through a shortfall will go into the br. You can do this any time after br, just do not sign any paperwork admitting responsibility for shortfall.
As stated earlier as your house sale will cover first mortgage send keys to them, they will be happy as they will get all their money. First Plus as in my case went with nothing.

Kepar you quoted me completly out of context, you cut off the bit of my post where I said

"The problem with handing back the keys, or voluntary possesion is that the mortgage co will want you to sign an acknowledgement of the shortfall, basically accepting responsibility for it, I belive this is ok to do before your BR as then when you go BR this shortfall now an unsecured debt will go into the BR."

I was making the point that if you sign an acknowledgement of shortfall after you go BR then you can be chased for the shortfall and that is FACT!

It even states this on the IS website!

http://webarchive.nationalarchives.gov.uk/+/http://www.insolvency.gov.uk/faq/faq.htm#18

"After the date of the bankruptcy order the mortgage loan creditor may ask you to sign a "deed of acknowledgment" of the outstanding debt. If you have signed such a deed the mortgage loan creditor can take action against you to recover any shortfall following the sale of the property."

But well done for giving out incorrect advice!

Regardless of the fact that the mortgage pre dates the BR if you sign the acknowledgment post BR then your asking for trouble!