Was bankrupt but kept house..remortgage advise pls

northantsandy

The value of my house is int +ve equity, but if I tried to sell it the various fees and early redemptions meant that it was in -ve equity.

An indicative e.g. is that house worth £100k, mortgage £98k, other fees and redemption were £7k meaning that in bankruptcy my debt would have been compounded, but remortgaging it wouldn't.

Now...I kept the house and paid my £212 to the OR and my fixed rate with the redemption penalty has now gone. The mortgage is on interest only and I really want to get it back to repayment...

Does anyone think that if I go to the MLender, they will be interested in offering me another deal?

Mike_St_Helens

Id be iterested on this one.. Im in the same boat....

chivers1977

There are two issues: conversion to repayment, should be no problem. Rate switch, this is dependent on your lender. A lot will just switch the rate without asking any financial questions as your outgoings will usually be less. You will not be able to change lender at the mo as far as I am aware.

madasaboxoffrogs

Please, please tell me how you managed to keep your house - I got conned by an ex and am now heavily in debt - as are his ex wife and mother......wish they'd warned me. Anyway, he dissapeared when money dried up, leaving me with 2 kids (1 his). House was mine before we met, mtg got doubled and still owe 55k besides. But still face losing the house for the kids sake - plus I worked my butt off to get it in the first place.

Sooty0404

Following bankruptcy some years ago I kept my house, made a considerable profit when I sold it and was able to assist my brother with the same situation some years later.
This may be a lengthy post but bear with me.
Firstly: when you are declared bankrupt the Official Reciever (OR) takes over your assets and has the duty to realise the best price he can. This may be the equity in your house, your car (if over a certain value) a valuable painting etc etc.
In the case of your house the OR never owns the house - just YOUR SHARE of the equity. If you are married and the house is in joint names your partner retains their share in full if only one party is declared bankrupt. For instance: house value £100k - outstanding mortgage £60k - equity £40k - OR's share when the house is sold £20k less his proportion of the selling fees.
If the house has little or no equity the OR has the same responsibility ie to dispose of this asset for the best price he can. It may be that the equity is only £5k and the selling agents fees and legal fees would be £7k, therefore leaving the OR with a shortfall - in other words a debt. He is therefore unlikely to force the sale on this basis as there would be no money to give to your creditors but he can retain his portion of the equity for ever and a day until he considers there is sufficient equity to make you sell. This could be many years down the line when your bankruptcy is a distant memory.
Here's what you do: after you have been declared bankrupt your partner/spouse or a trusted friend or relative can make the OR an offer for your share of the equity. If there is no equity or negative equity this offer can be as little as £1 (yes one pound). There has to be a monetary amount in order to raise a contract of sale. If the OR can be seen to have sold a debt or negative asset for a positive amount of money then he has done his job.
In my case the OR sold my share of the equity in our house to my wife. Please note you will have to pay the OR's legal fees (approx £200) and your own legal fees in order to register the transfer with the Land Registry. You now have the house and ALL the equity back with you (or at least with your partner/spouse/family).
In my case my house had a value of about £55k (it was actually more but they don't challenge you unless you are being totally unrealistic) with a mortgage of £52k. If you have been made bankrupt the chances are that you are behind with your mortgage payments and your account has been passed to your Lenders Collection Department. With my wife now owning all the equity we contacted our Lender (who still has the first charge) and made an offer of £40k to settle the mortgage. They 'negotiated' this figure up to £42k (still saving us £10k). My wife then went to a well known building society to obtain a £42k mortgage against a house worth £55k+. It was formality.
Once the OR has sold to your representative it doesn't matter if your house doubles in value overnight. When deal is done it cannot be reversed. We added an extension and sold the house 2 years later for £95k. The equity legally belonged to my wife and was untouchable by anyone else.
I helped my brother as follows: value of house £125k - first mortgage £40k (paid up to date) - second mortgage (unpaid) £100,000 with interest - equity minus £15k
I bought of the second mortgage for £30k and bought out the OR for £1 + fees. His house is now worth £150k divided as follows: First mortgage £40k - second charge (mine) £30k - equity £80k which his half mine and half belongs to his wife. All he has to do is service the first mortgage which is affordable and some time in the future we will sort out the rest.
I hope you have not been too bored reading all this but it may help you if you are in a similar situation - don't despair - you will never be homeless the day you are made bankrupt and may never lose your house at all if you play it right. Good Luck

Ash3G

For a first post Sooty, that is outstanding! :money:

mattyboy7110

Sooty, did you have to get a new mortgage in just your wifes name or did you do this because you knew you would save further money?

Thanks

silvercar

Sooty, interesting post. can I ask how you persuaded the lenders to accept reduced pay offs for a secured debt? On your brother's home you say the second mortgage of over £100k was settled for £30k. I don't understand why the lender would agree to this, surely they would be better off repossessing?

On another forum (singingpig.co.uk - please delete if I'm not allowed to mention), people talk of the impossibility of persuading lenders to make a settlement on secured loans. Curious to know you persuasive techniques.

Sooty0404

Mattyboy - it just made sense to do the new mortgage in my wife's name because she owned the equity and secondly I didn't think I would get a mortgage as I was a bankrupt. The shortest route to a satisfactory completion was to let the wife do the borrowing.

Silvercar - I know it sounds impossible but its true. The house at the time was worth about £125k. Under a forced sale it would probably have fetched about £80 - £90k. After the first mortgage had been paid the second lender would have received £40 - £50k less selling fees and expenses. My offer to settle at £30k took away all the hassle for the lender and actually covered the original capital loan. As a major bank they also have to consider the social cost of re-housing which would fall on the state.
Once a debt leaves the bank and passes to either their collection department or, as is usual, an outside agency (in this case a firm of solicitors) you would be amazed at what they will settle for if you have the courage (or downright cheek) to front them out. In my brothers case I originally offered £25k - they asked for £35k and we met in the middle.

Here's a piece of info I learned recently whilst battling with one of a number of credit card companies. After a certain period of time (I'm not sure how long) some credit card companies sell the debt to an outside agency for about 11 - 15% of the outstanding balance. Therefore anything they receive beforehand in excess of this figure is a bonus for them. I have just received an offer from one of my credit card companies to whom I owe about £6k offering to settle at 40% if paid over 3 months, 50% over 6 months or 60% over 12 months. I will probably ignore them for a while before going back with a 25% offer versus the threat of making myself bankrupt. They can then decide if they want 25% of £6000 or 100% of nothing. What do you think they will do?
Please don't think that I am a professional bad debtor. this time last year I had a credit score of 988 out of a possible 1000 but circumstances change, as mine have done over recent months.
My philosophy (right or wrong) is that whilst debt is a major concern, don't make yourself ill with worry. Don't let it ruin a marriage or relationship and DONT HIDE from it. After all, you've got their money so let them worry. When I was forced into bankruptcy in the early 90's I remember reading a leaflet in the OR's office which said "BEING IN DEBT IS NOT A CRIME". This one sentence has been firmly printed in my mind ever since. If your debt has accrued legitimately you have done nothing wrong in the eyes of the law.
A major lender will seldom instigate a court action or repossession if there is a glimmer of a chance of receiving some money via the normal channels. As long as you communicate with them and pay a little bit (and it can be a VERY little bit) most of them will work with you to find a solution. The secret is not to be intimidated by the numerous calls they will make. Remind them (politely) that more than 3 calls in one day constitutes harrassment and if necessary request that all communication be in writing only. I now receive a couple of calls a week whereas I was getting 10+ per day.
If credit cards have incurred late or missed payment charges, these are illegal. Dispute these charges using the information available on this website. Once the account is in dispute they cannot persue for it until the dispute is settled. This will, at least buy you some time.

I have only just joined this site and think I should make it clear that I am not, in any way, a financial professional. My posts are written and based purely on my personal opinions and experiences, all of which are genuine. Everyone's circumstances are different but if you can use anything I have written to your own advantage then I am happy to keep posting.

Although the light at the end of the tunnel is invariably some b*****d with a torch bringing you another bill, you can 'deal your way out of debt'.

Good Luck

northantsandy

Ah! I am single...my BRO was linked to my divorce!

northantsandy

My problem is my B was linked to my divorce so all on my own...