BR & Secured Loan

Hughesy84

Ok here's the script.....

If someone is considering BR, they have big debts, zero equity in their property and also have a secured loan (£12k).

They have now not paid the secured loan for 2 months.....IF the person in question goes BR, what can the loan company do about it?

Could they take the person to court before BR? Or would the court reject it if they had already started BR proceedings?

How long would court action take from a secured loan company? (Welcome)

Can they get a CCJ to ensure they still get their money? Or will BR wipe it out and the official receiver will just deal with it and basically tell them to go away??

silvercar

In theory the loan company could go to court to repossess the house. With zero equity, the loan company would get nothing. The question is how far down the repossession road would the secured loan company travel before realising it is a wasted and costly journey? Depends on the company and their internal procedures. It is a risk , but unlikely to go the whole way I would guess.

If (big if) they got to court, the court would allow the repossession - as that is what having a loan secured means - your home is at risk if you don't keep up repayments.

Even after bankruptcy the secured loan lender can still go to court. The secured loan is not part of the bankruptcy but if the property is sold (or repossessed and then sold) any shortfall on the loan does become part of the bankruptcy.

Making the shortfall part of the bankruptcy can occur at any time after the bankruptcy provided the bankrupt has not signed anything post bankruptcy taking responsibility for the debt - this could be an acknowledgement or a new mortgage deal.

As for how long it takes, minimum of 2 full months of arrears before they would start to do anything, then at least 2 months before it got to court I would guess. But it could be 2 years, some lenders are very slow to act, particularly if there is little equity at the moment.