Banktuptcy & Buy to Let in negative equity

tmb70

I have now declared myself bankrupt and wanted to retain the houses I have, all with negative equity, to maintain some sort of basic income.

The OR says they are investments so the OR will keep the rent and not pay the mortgage. The end result is repossession or LPA receiver from the lender.

Has anyone had any similar experiences?

I have been told by my examineer to write a letter to the OR.

dojoman

If they are not family homes then any "income" derived from them will definitely be taken by the OR. This is the case for everyone.

silvercar

dojoman wrote: »

If they are not family homes then any "income" derived from them will definitely be taken by the OR. This is the case for everyone.

It seems unfair that income from BTL is considered differently from income from employment. Isn't BTL a business like any other?

Reading on here, it does seem that others have experienced the same (worse) treatment regarding BTL income.

Is your BTL owned directly by you or through a company?

fermi

http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part11/Part%201/Part%201.htm

Explains somewhat.

debtinfo

silvercar wrote: »

It seems unfair that income from BTL is considered differently from income from employment
no it is not


. Isn't BTL a business like any other?yes and every other business come to an end at the date of the bankruptcy with the assets such as leases, property, stock etc becoming part of the bankruptcy estate

Reading on here, it does seem that others have experienced the same (worse) treatment regarding BTL income.

Is your BTL owned directly by you or through a company?

They are treated exactly like all other assets, for example if you had shares then the dividends from them would be part of the bankruptcy, if you had savings then the interest would be part of the bankruptcy, so in the same way these properties (or the interest in them) become part of the bankruptcy and any money they earn is due to the bankruptcy.

Some people see what they think is a business carrying on after a bankruptcy but in fact what technically hapens is that the business stops and any assets at that point transfer to the trustee and the persn then starts a new business, In very limited circumstances some assets (specifically tools of trade ) are exempt from the bankruptcy but a property does not come under that definition

wayforward_2

I had exactly the same thing. Even though the BTL property was in negative equity (in fact we had been subsidising the mortgage for some years) the OR said that the rent becomes part of our income but the mortgage on the property is not an allowable expense and therefore would we would not be allowed to make the payments.

Upshot is we either had to sell it or have it reposessed. Luckily we sold it for the amount outstanding on the mortgage (more than the market value but someone wanted that particular house).

silvercar

Your previous thread here:

https://forums.moneysavingexpert.com/discussion/3456515

By page 4, it was mentioned that your BTL properties were at risk...

tmb70

dojoman wrote: »

If they are not family homes then any "income" derived from them will definitely be taken by the OR. This is the case for everyone.

Thank you for the reply, if the property is solely owned it is very difficult (impossible) to retain. I think it is easier if the are deemed to be joint.

tmb70

silvercar wrote: »

It seems unfair that income from BTL is considered differently from income from employment. Isn't BTL a business like any other?

Reading on here, it does seem that others have experienced the same (worse) treatment regarding BTL income.

Is your BTL owned directly by you or through a company?

Silvercar, the properties are in my name only, ie no company!

tmb70

fermi wrote: »

http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/TechnicalManual/Ch25-36/Chapter31/part11/Part%201/Part%201.htm

Explains somewhat.

Yep, I have read it, not good

tmb70

Please can you read the link below and applying this info from the technical manual, it would mean the BTL properties can be mine again.

http://webarchive.nationalarchives.gov.uk/+/http://www.insolvency.gov.uk/freedomofinformation/technical/technicalmanual/Ch25-36/Chapter33/part6/part_6.htm