Bankruptcy, Main Residence & Mortgage Company

fermi

tmb70 wrote: »

ferni, may I ask what you thought you had seen . . .

Something about them taking action to prevent it re-vesting if solely owned.

I'm sure I misread, as I can't find it now. In fact, the bits I can find suggest that they wouldn't try in a case like yours.

Sorry to panic you/me.

tmb70

fermi wrote: »

Something about them taking action to prevent it re-vesting if solely owned.

I'm sure I misread, as I can't find it now. In fact, the bits I can find suggest that they wouldn't try in a case like yours.

Sorry to panic you/me.

fermi, many thanks. Can I ask what you do, as it appears you are working on the forum. Unsure how Money Saving Expert operates, do you assist?

fermi

tmb70 wrote: »

fermi, many thanks. Can I ask what you do, as it appears you are working on the forum. Unsure how Money Saving Expert operates, do you assist?

I'm just a normal user who has volunteered to help out as a Board Guide.

See: http://www.moneysavingexpert.com/site/forum-faqs#teamguides

I probably spend too much time on here But I've been through the BR thing myself, so I find it satisfying to help people who are going through much the same thing. It can be a very hard time to cope with.

silvercar

So assuming you go bankrupt and everything is written off including the personal guarantee, what happens to the house?

option 1: Its valued really low (ie point out to the independent estate agents all the flaws), show that the mortgage is well in excess of value and hope the OR gives it back to you - now or in 3 years time. You keep paying a high mortgage.

option 2: the OR values it high and decides that there is equity and it wants it. So the OR waits 3 years and then requires you to remortgage/ borrow more or sell up.

option 3: you are forced into a situation where you build up arrears (either because you aren't earning enough to pay the mortgage or because the OR decides on an IPA based on rentals in your area that doesn't give you enough to pay the mortgage. Eventually the mortgage lender repossesses. Any negative equity is written off in bankruptcy. You've lost your home and want it back. If it is auctioned off there is the possibility that your wife could buy it cheap, but otherwise its lost

silvercar

The answer is clearly less the mortgage balance, the lender will attempt to sell to recover as much as possible then chase me (sole name owner), however, if I am bankrupt I understand the lender will obtain zero from me.

So can a figure be negotiated between the "Z" amount and the mortgage balance, plus through the banking £65b further write off.

In repossessing the lender gets the property sold and an end to the arrears building up. They get an immediate return of some of the money they lent you. You are right that the lender will get zero extra from you in bankruptcy. But if you approach the lender with this approach I don't see the gain from them. You are saying to them please right off X k and in return you will pay a lower mortgage. From their point of view they may as well keep to the higher mortgage and let the arrears build up. They can then decide whether to repossess now or wait for prices to increase.

Remember that in bankruptcy any negative equity is written off, but if you stay in your home the arrears continue to build. 20 years down the line the neg. equity will be gone and the lender gets a full return.

tigerfeet2006

tmb70 wrote: »

tigerfeet2006, you are absolutely correct, apologies.

Sorry was just checking that you hadn't spoken to one of the hundreds of shysters that are around.

tmb70

tigerfeet2006 wrote: »

Sorry was just checking that you hadn't spoken to one of the hundreds of shysters that are around.

tigerfeet2006, oh yes I know where you are coming from, thanks

tmb70

silvercar wrote: »

In repossessing the lender gets the property sold and an end to the arrears building up. They get an immediate return of some of the money they lent you. You are right that the lender will get zero extra from you in bankruptcy. But if you approach the lender with this approach I don't see the gain from them. You are saying to them please right off X k and in return you will pay a lower mortgage. From their point of view they may as well keep to the higher mortgage and let the arrears build up. They can then decide whether to repossess now or wait for prices to increase.

Remember that in bankruptcy any negative equity is written off, but if you stay in your home the arrears continue to build. 20 years down the line the neg. equity will be gone and the lender gets a full return.

silvercar, as this is all a new experience (what a description!), I am not clear on the negative equity being written off.

Just looking at the situation now, say you have a mortgage for £100k and the property is worth £75k therefore £25k negative equity, are you implying that my new mortgage balance is reduced to £75k! Ummm.

Can you help me please.

fermi

Negative equity is only written of when the house is sold with the shortfall. The shortfall doesn't exist as a debt that can be included in the bankruptcy until then.

Once it does exist, it falls into the previous bankruptcy. As long as you have not signed anything to make you liable again.

tmb70

fermi wrote: »

Negative equity is only written of when the house is sold with the shortfall. The shortfall doesn't exist as a debt that can be included in the bankruptcy until then.

Once it does exist, it falls into the previous bankruptcy. As long as you have not signed anything to make you liable again.

fermi, thank you for making it clear in my mind.