Finally ready to walk away...

Maxnana

Hello,

I have posted on this forum in the past asking for advice on bankruptcy & repossession, and have received some very good advice and support. My main problem though, was that although I wanted to get off this downward spiral of debt, I wanted to hold on to our home at all costs. This was the stinger, because although that's what I wanted, I knew in the long run it wouldn't be possible if I wanted any qua;lity of life in the future.

Now, finally, I have got my head round the fact that in order to have true peace of mind, the house will have to go. I've tried to cling on to it long enough, and all that's caused is worsening debt and deepening anxiety and worry. Something a forum member (I think it was Kepar?) said in a reply to me months ago keeps coming back into my head: "It's only bricks and mortar". Well, I have finally realised that is quite true, and accepted the truth in the old saying "Home is where the heart is".

So now Christmas and New Year is over, it's time for us to get our lives back on track, so that perhaps this time next year we can have a 'happy new year'.

Briefly, our situation is:

• Mortgage with Santander for £65K (in a few hundred pounds arrears, being paid off at an extra £50 a month) = £500 a month
• Secured loan (this has been our downfall) with First Plus for £100K (in a few months arrears, being paid off at an extra £100 a month) = £1000 a month
• An IVA in place for £300 a month (presently seeing if we can get the payments reduced temporarily to half that amount, but in reality, this won't help anyway!)
• Our home has recently been valued at £125K = £40K negative equity
• Both myself and my husband work. He is now currently bringing home on average half of what he was 2 or 3 years ago. (Car sales, basic plus commission). I have recently heard my contract is very likely to end at the end of March (lack of funding)
• My son aged 22 lives at home with us and is self-dependent
• I have a car on finance (2 years left on agreement)
• Various other outgoings, as per the general population - utilities, day to day living expenses, couple of catalogues etc.

We have now decided after much heart-wrenching and deliberation, that with nearly 20 years still to go on the mortgage/2nd charge, continuous increases in the cost of our outgoings, and decreases in our incomings, it is time to let go and swap the eternal penny-pinching, robbing Peter to pay Paul, and endless anxiety and depression, in favour of some quality of life, just for the sake of 'owning' our own home. (That's if that would ever happen anyway - by the time the mortgage is paid off, Iwe might have to sell it to fund our Nursing Home care!!!)

What I would really appreciate advice on now, is how to go about things. What I don't want, obviously, is to jump out of the frying pan into the fire.

We know the house will have to go, but how do we do that? Do we stop paying the mortgage/2nd charge and wait for them to repossess? Do we just hand the keys back to the mortgage company and walk away? Do we go bankrupt? If so, do we do that before or after we have lost the house? Do we stop paying the IVA first? Do we find a house to rent first, or wait till our house is repossessed?

I am sorry there are so many questions, but we really have no idea how to go about this. We have been trying to get an appointment with CAB for 5 weeks now, still no joy. We have contacted Debt Helpline and CCCS, but they want us to tell them what we are planning to do before they will advise us. But we just don't know! PayPlan (who we have our IVA with) are worse than useless.

Perhaps one (or some) of you kind, knowledgable people on here can help and advise me. At least about where to start our journey to (hopefully) the light at the end of the tunnel.

Thank you in advance for any replies, and apologies for the length of the post!

NeverAgain_2

The likely outcome here is bankrupt and renting.

There is no right or wrong order to take the various steps to achieve that.

Finding somewhere to live is a priority, so I would start with that.

If you stop paying the mortgage/loan it will take several months before you are physically evicted, so you have time to move before that happens.

Somewhere along the way you will need to declare yourself bankrupt.

Some landlords are reluctant to rent to bankrupts, so it might be best to rent somewhere first in the reasonable expectation the landlord won't throw you out should he find out about your subsequent bankruptcy.

Renting will also involve a credit check, which you may pass now, but will struggle with as an undischarged bankrupt.

Xbigman

Is your son going to continue to live with you after you rent and go bankrupt? That makes some things easier (you can put utilities or maybe even the rented property in his name). And some things harder (the OR will want him to pay his share of any rent/bills).





X

Tupperware_Queen

Hiya, didn't want to read and run, I don't have a professional opinion, but having been through a similar situation myself, I rented first, and then went BR. If you have to use the money you would have paid the mortgage with to save for a deposit and then BR fees, that is something a lot of people have to do.

be patient with CAB, they are probably inundated at the moment.

Good luck x

Maxnana

Yes, my son is going to continue to live with us for the foreseeable future. He does pay something towards board an lodgings already.

betmunch

If you sell the house you will be required to make up the negative equity, (First Active can block the sale if they dont get paid off) I dont expect you to be able to do that judging by your first post so expect that you will need to be repossessed rather than sell the property yourself. This will incur further costs.

If you get repossessed then First Active will come after you for the shortfall on their loan when he house does finally sell.

I believe (and I could be wrong) that you will need to be repossessed, have First Active aproach you to pay off the shortfall on the (now un)secured loan, then have that wrapped up into the bankruptcy.

I would suggest that you speak with a Bankruptcy practicioner before you proceed.

Good Luck, and keep us updated

Maxnana

Hi betmunch,

We are not considering selling the house - just either handing back the keys and walking away, or else allowing the mortgage company to reposses. I'm not sure which of those is the best way to do it - that's why I was asking the question.

So what you are suggesting is to stop paying both the mortgage (to Santander) and the second charge (to First Plus), then find a rental property, then file for bankruptcy, then when the mortgage company finally sell (what was) our house and Santander take their bit (in full), leaving first Plus with a shortfall, add this shortfall to the existing bankruptcy when First Plus come after us?

Also, at what stage do we stop paying the IVa?

Sorry if I sound dumb, but I really don't have a clue how is best to go on this, and I will only get the one chance to get it right. Of course, I would ideally love to speak to a bankruptcy practitioner before we proceed, but as I said in my initial post "We have been trying to get an appointment with CAB for 5 weeks now, still no joy. We have contacted Debt Helpline and CCCS, but they want us to tell them what we are planning to do before they will advise us. But we just don't know! PayPlan (who we have our IVA with) are worse than useless."

NeverAgain_2

Your plan is roughly the way I would do it.

Don't worry about the mechanics of repossession, you don't do that, one of the lenders does.

You don't have to do anything with the house other than leave it, although most people like to inform their mortgage lender.

What you must not do is enter into any dialogue/fill in any forms/sign anything with reference to either of the two big loans.

Some lenders will attempt to make you sign something which makes you take responsibility for the debt outside of bankruptcy.

There's no point in continuing to pay the IVA, that £300 a month will be handy for rental deposits and bankruptcy fees.

No doubt you will get lots of letters and phone calls from the IVA creditors, but there's not much they can do in the few months prior to you sorting out a new place to live and declaring bankruptcy.

anniebaby_2

hi maxnana we are feeling and going thru the exact same position, we have help from the law community but they have our br forms and are hard to get hold honest we are in the exact same position you are but we have decided to take our own course of action at the moment. 1st we are getting rented accommodation (obtained list thru ur council offices) . 2nd we are vacating our premises in about a week (not waiting to be evicted) then download our br forms fill them in and we have been told by the law commmunity that the courts do br by an appointment on either a monday or friday (need to call the courts to make appointment or ask them). do not pay no-one stop all payments cause bankruptcy costs are as follows 525.00 bankruptcy and 175.00 court costs ok if u want to speak to someone going thru the same situation as yourselves (it just releases some tension speaking to other people) then send me pm ;-)

betmunch

Just to be clear, I was not suggesting any course of action at all. Except that you see a professional Bankruptcy Practicioner

I was explaining my understanding of what will happen with the secured debt that you have.

Sorry I cant be more helpful or supporting but I'm not in a position to bite the hand that feeds me if you know what I mean.

I can still wish you good luck though, so once again, good luck!

sundays

If your planning BR i would stay put as long as possible and be repossessed , it will several months enabling you time to get a good rental and save some money.
Be prepared that rentals are not cheap and could = your current payments.

i would not just walk.