Bankruptcy, Main Residence & Mortgage Company

silvercar

I'm making up figures here, but say the property is worth 200k and your mortgage is 220k then the OR can wait a couple of years to see if the property increases in value. If it increases to say 250k, then there is 30k equity; 15k of that could be yours and 15k your wifes. So the OR could say in 2-3 years time that you can buy back the BI for 13k. If you can find the money, you can do that.

If the mortgage is 200k and the property worth 120k, then the OR can wait to see if its value increases of he can accept that it won't increase that much and give you back the BI now.

silvercar

One argument in court to prevent the charge being finalised is that you are likely to want to sell the property (to pay off your mortgage for example) but a charge by the bank would prevent you doing so. So to allow the charge would give this bank a hold over you and the sale, effectively making this bank have greater power than the main mortgage lender - which would be wrong.

Of course if the bank did secure the charge and you allowed the home to be repossessed, the bank gets nothing and you walk away debt free - though without your current home. Given that it is in massive negative equity, would this be an option?

tmb70

silvercar, thank you for the post above setting out my argument in court, fact is a Personal Guarantee was signed and has been called in, plus I have spoken to many people attempting to negate the PG, but have been told they are fairly bullet proof.

Just looking from the outside in it is a high risk strategy, whereas going BR it strikes a line in the sand with various potential pitfalls.

I want to keep our home. The mortgage is large and I forsee an achievable price 60 odd % at present of the mortgage balance.

Without going into exact figures your example for negative equity in 7.08pm is about correct with ratio but higher

silvercar

silvercar, thank you for the post above setting out my argument in court, fact is a Personal Guarantee was signed and has been called in, plus I have spoken to many people attempting to negate the PG, but have been told they are fairly bullet proof.

No guarantee it will work! PGs are unsecured, the bank is trying to make it secured. If they had wanted a secure guarantee they should have taken a charge on your home at the time.

I want to keep our home. The mortgage is large and I forsee an achievable price 60 odd % at present of the mortgage balance.

So securing the charge gives the bank nothing, given the size of the mortgage! Make that point to the court.

Just looking from the outside in it is a high risk strategy, whereas going BR it strikes a line in the sand with various potential pitfalls.

Compare your mortgage payment with the typical rent in your area for a property of sufficient size. Then decide if bankruptcy will allow you to make your mortgage payments and remain in your home.

Another risky strategy is not making repayments to this lender. Will they repossess given that they would get nothing after the mortgage is cleared? Logically not, but joined up thinking is not always the way.

tmb70

silvercar, thanks for the input. I will give it some thought on PG (unsecured) v Court. It is a risky strategy as the decision could go either way on the day.

My thoughts are to BR to retain as much control as possible - if that makes sense.

Cheers

fermi

If you go bankrupt before the interim charging order is made final, then the court is not entitled to make the changing order final and would have to dismiss it.

You say your main residence in in negative equity?

Is that likely to change in the next 2/3 years? Forgive me if you've said and I've missed it. Quite a lot to read here.

silvercar

fermi wrote: »

If you go bankrupt before the interim charging order is made final, then the court is not entitled to make the changing order final and would have to dismiss it.

You say your main residence in in negative equity?

Is that likely to change in the next 2/3 years? Forgive me if you've said and I've missed it. Quite a lot to read here.

Yes, OP said it was only worth 60% of the mortgage value. So a lot of negative equity.

fermi

silvercar wrote: »

Yes, OP said it was only worth 60% of the mortgage value. So a lot of negative equity.

OK. In that case the OP and other posts are correct.

The OR would sit on and BI on a jointly owned home for 2 years 3 months to see if any equity developed.

If on that review any equity is still below £1,000 then they would either let the BI automatically re-vest after the 3 years, or disclaim their interest allow in to re-vest before that.

debt_doctor

Hi,

Much has been said (especially by Silvercar) and you have received good advice, to raise some points;

You will not be able to negotiate your way out of your current mortgage (reduced payments because so much neg equity) you may get reduced payments for a while as a concession, but any such move ultimately puts your home at risk.

District Judges love Charging Orders! I have used every legal argument in the book over the years with almost nil success. DJs think it is perfectly fair for a lender to 'secure' their debt. The best argument I could suggest (bearing in mind my track record on the subject!) is that a CO will severely prejudice your other creditors in that you are insolvent and a CO would remove this creditor from BR proceedings. Doubt whether it would work though and by far your best option to avoid a CO is to go BR before the order is made final.

Good luck.

DD

silvercar

Seems to me that the house is the sticking point. You talk of your wife getting a mortgage and taking it on. That assumes that she has good credit and sufficient income to be given the mortgage. Effectively it is a sale to your wife if the property is all yours at the moment. Even if the mortgage lender did agree a reduction in mortgage size, that would still leave your wife with negative equity (making getting the mortgage improbable).

Consider this (and I'm making up numbers as before). Property value 120k, mortgage 200k. So you want to negotiate this mortgage down and say let your wife take a mortgage of 160k for the property. So the lender foregoes some of the borrowed amount and the property becomes your wifes. Now if you found an identical property for sale your wife could buy that for 120k, so it makes no sense to take on any mortgage bigger than the property value, when your wife could buy an identical property at a cheaper price.


The other sticking point is that in bankruptcy the official receiver is only going to allow to keep sufficient money for you to pay a mortgage of the size of a suitable rental property in your area. If your mortgage is a lot more than that you are going to run into problems - unless your wife has a high income of her own.