Bankruptcy, Main Residence & Mortgage Company

tmb70

Hi all, I really need some advice.

I had a business building new build schemes, due to the downturn a scheme is now repossed. An interim charge will become a full charge on my main res due to a personal guarantee and I have a long list of other debts.

I plan to go bankrupt and start a clean slate.

My main residence has genuine negative equity so apparently it will be vested back by the OR.

I am attempting to approach the mortgage lender with the view of asking them to write off 'X' amount and remortgage (in my wife's name) for a reduced settlement.

The mortgage is a subsidary company of Lloyds/HBOS which are part of a government scheme whereby when they hit £65billion of further losses then the government (taxpayer!) will stump up.

All I want to do is reduce my huge mortgage, and ask the banks to write some of my debt off.

Has anyone had or know of any such dealings?

Feel free to send PM's

Ineedaname

I'm not sure whether you would fall foul of asset disposal rules by doing this, even though there is no equity in the property.

Sounds like you need to speak to Business Debtline on 0800 197 6026 for some specific advice on your situation.

tmb70

Many thanks for your response, please can you elaborate a little. I have spoken to the Bankruptcy Enquiry Line and have stated that the technical manual (OR bible) says my main residence will be vested back as there is such large negative equity.

Ineedaname

It cannot be vested back to you if you have sold the property to your wife.

When you go BR part of the form asks about disposal of assets. You would need to declare that you have relinquished your interest in the family home. The OR may have something to say about this as if you keep the property joint then they have 3 years in which to deal with it and in that time prices may increase, potentially providing equity which the OR would have a right to a chunk of.

Hopefully I've got that right and one of the gurus will be along shortly to say if disposing of a negative equity property to a spouse will be a problem or not.

tmb70

Hi and thanks again for the prompt post. I dont think I have explained properly . . .

I have a bank wanting to place a full charge on my main residence, court date Monday 12th September, (it is an interim charge at present). The charge will be a huge amount.

A way to prevent the bank from obtaining any future equity will be to go BR, taking away any other debts.

I also have a huge mortgage, remortgaged and invested in the company. The company has gone as the bank allowed building works to continue and then refused to pay (I guess this was the long term strategy), so in effect the company was insolvent, then the bank sent in LPA Receivers to sort out the distressed scheme which is still ongoing.

The technical manual says the main residence can be vested back to me due to large negative equity. At some point in the future I would anticpate a reduced settlement linked to the negative equity factor and any rights I/we may have with young children etc . . . (I am open to any guidence on the matter)

It is all massively stressful, I have been to a stroke clinic a few years ago when the downturn happened and have some other minor (I call them) medical issues.

So all I want to do is somehow retain my main residence, manageable mortgage balance and a clean slate. Perhaps I am asking to much, but I hope not.

Cheers

silvercar

Assuming you don't go bankrupt before 12 Sept and the charge is imposed - the charge and your main mortgage will not form part of the bankruptcy. So to continue living in your home, you will need to keep up with repayments on the mortgage and on the then secured loan.

Once bankrupt the OR will have your share of the beneficial interest in the property, so it can't be sold without the OR agreeing. Given the negative equity it can go either way, either the OR will return the BI to you or the OR will hold on to the BI for a couple of years and see if the value increases.

...if you do go bankrupt before 12 Sept and if this means that the lender can't put a charge on the property (not sure on this, given the interim charge already exists), then the OR still gets the beneficial interest. The BI will then be larger and it may mean the OR is more likely to wait and see what property prices do before returning the BI to you.

silvercar

At some point in the future I would anticpate a reduced settlement linked to the negative equity factor and any rights I/we may have with young children etc . . . (I am open to any guidence on the matter)

Don't know what you mean by this. With negative equity you can't sell without the lender's agreement. So a sale or voluntary repossession leaves you with nothing. Even if the lender agreed to take less to allow a sale to proceed, they won't leave you with any money.

Having young children won't influence a lender - other than a judge giving you a couple of weeks longer in a repossession hearing.

silvercar

I am attempting to approach the mortgage lender with the view of asking them to write off 'X' amount and remortgage (in my wife's name) for a reduced settlement.

Not going to happen, even if you remortgage to wife's name, if you went bankrupt the OR would examine the transaction and probably claim some of the beneficial interest on the grounds that you did a paper exercise to avoid relinquishing some BI. Your wife would need to have an income to justify the mortgage and a clean credit record (so probably not associated with you financially or your business).

If you did go bankrupt the OR is likely to only allow you a mortgage payment of a similar size to a rent amount on a property of a size suitable for your family. If you have a large mortgage, don't assume the OR will allow you enough money to pay that.

tmb70

silvercar, thanks for you response. I want to avoid the full charge as it is hundreds of thousands. The charge cannot be made full in the event I go bankrupt (I am led to believe).

Yes I will need to keep up the repayments. If the charge becomes full, then the bank sit there in the background until they deem sufficient equity to either force a sale or step in when the property is sold. So I will have nothing from the sale to look after myself or my wife in a care home and suchlike . . .

The main res has no equity and is a long way off having any equity. I have been told the technical manual the OR uses says it will be vested back (only what I have been told).

So if I understand correctly the OR (or trustee appointed by the OR) will have control - HOW LONG FOR? But I have been told it is vested back to me/wife - so it is given back!!!

Can you tell me what BI stands for?

Thanks for your help.

silvercar

BI= beneficial interest ie the amount of equity in your home after the mortgage and any secured loans or charges are taken off its value.

silvercar

So if I understand correctly the OR (or trustee appointed by the OR) will have control - HOW LONG FOR? But I have been told it is vested back to me/wife - so it is given back!!!

The OR has upto 3 years to deal with the BI. So after 2 yrs 3 months they generally look at its value and decide if there is any equity in it. If there is, then you or your wife could buy it back, but this means coming up with the money to make the OR an offer for the BI.

You are a bit caught in that, if the charge is secured at court, then you owe the bank. If the charge isn't secured then the OR can claim your share of the BI - so either way you lose out.