Hello, bankruptsy becoming an option.

bloom1234

Hi,

Just exploring this as an option right now. Please can I ask some Qs to see what might happen if we went through with bankruptsy?

I have recently posted in other forums here because our house is in negative equity in an area that is just getting worse and was considering either overpaying like crazy and hoping the market picks up or trying to let it out but have been put off of the idea. My mental health isn't good and we have two young children and I just can't carry on like this.

We're paying 8% interest on a mortgage on a house that prob would leave a 20-30k shortfall should we sell and we need to leave. We can afford the mortgage payments, just can't stay. Might afford to repay the shortfall over a large number of years but 30k over 7 years for example would make life very hard.

I've been trying to read up on it and it is quite confusing. When would we have to apply for bankruptsy? Before, during or after we stop payments. Would we be better off leaving, handing in the keys and stopping payments, not signing anything to say we'll make up for shortfall

The mortgage is solely in my husband's name. Am I clear from debt? If our car (worth 3k max) is in my name is that safe for me to keep? IF we move to rent before surrendering our home re we free from bailiffs turning up there? We don't have any other assets. Nothing new in the house. TV is 6 years old as are most other things. Sofa is worn out. No jewellery worth more than £300. No ipads etc.

Also, would my husband be thoroughly shamed or would his dignity remain fairly intact? Are we talking newspapers or just a notice outside the home?

Thanks.

fermi

Do you have other debts other than the potential shortfall?

If the shortfall is the only big problem, then I would be inclined to think that letting it happen and then negotiating might be preferable. i.e. perhaps do a settlement or write off on it rather than going bankrupt. If the mortgage company won't play ball then you could still go bankrupt, so they might be amenable to a something rather than nothing deal.

BR doesn’t go in the newspapers any more, unless there is a good reason e.g. you are a business/trader so it needs to be advertised so suppliers/local creditors are aware. Personal bankruptcy cases as a general rule rarely go in the paper now.

bloom1234

Hi,

Thanks for your reply. We have about 7k plus shortfall of 15-25k.

Was up until the small hours trying to research and came across IVA's. thinking that this may be something that would be more suitable for us as long as we fit the criteria. I can't see living costs plus a 22-32k unsecured loan being affordable or possible so that might stand us in good stead if we pay an affordable amount every month.

I'm not entirely sure what the difference between BR and IVAs are so need to look deeper but so far it looks like IVAs are for smaller debts and you pay some of the debt back over 5 years whereas you pay an affordable amount back for 1-3 years with bankruptsy but somehow and IA is the lesser of the two evils.

My husband is calling a debt advisor to arrange a call/meeting so will let you know what they say.

tigerfeet2006

Bloom please make sure it is one of the free debt charities he is ringing and not one that charges.

Look at the list in the Look Here First; Bankruptcy Help sticky or click on the blue links in Fermi's signature.

GDB2222

I can answer a couple of your questions. If the mortgage is in your husband's name, you would not need to become bankrupt yourself. Your car, which is in your name, would be okay, as would your jewellery.

There will be no signs outside your house, or anything like that, although there is likely to be an advert in the small print of a newspaper. The chances are that nobody will notice it.

There is no reason for bailiffs to visit you, but if one mistakenly visits, you simply refer him to the trustee in bankruptcy and send him on his way. That is the whole point about bankruptcy – your husband is no longer liable for his debts.

You need to make sure that you are not jointly liable for the credit card debt, for example.

tigerfeet2006

GDB2222 wrote: »

I can answer a couple of your questions. If the mortgage is in your husband's name, you would not need to become bankrupt yourself. Your car, which is in your name, would be okay, as would your jewellery.

There will be no signs outside your house, or anything like that, although there is likely to be an advert in the small print of a newspaper. The chances are that nobody will notice it.

There is no reason for bailiffs to visit you, but if one mistakenly visits, you simply refer him to the trustee in bankruptcy and send him on his way. That is the whole point about bankruptcy – your husband is no longer liable for his debts.

You need to make sure that you are not jointly liable for the credit card debt, for example.

A) If the house is repo'd by the mortgage co. then they will more than likely put a notice in the window saying it is repo'd.

Most personal BR these days are not advertised in the paper due to cutbacks. If it is in the public interest then they will.

bloom1234

Just had a look at a homeselling site and a house on our development just had an offer of £51500. Must be a repossession. If that's all we could gain for ours that would mean a shortfall of 35k and another for sale for 65k which would mean a shortfall of over 20k. Hardly seems worth bothering with estate agents and viewings.

What would you do? Save enough to find a rental property, start arranging for non-debt bills to leave my personal account (not in hubby's name), notify utilities that we're leaving and just leave giving the bank notice that we're not paying the mortgage, hand in the keys and begin bankruptcy/IVA (if possible) plans or go through the whole house selling procedure that could take months and then apply for bankruptcy?

Can we just cease payments or do we need a bankruptcy plan in place first? We'd need salary to pay rent and utilities so couldn't afford to be without.

He's calling the cccs. Is that reputable?

tigerfeet2006

CCCS is very reputable We usually recomend that you talk to 2 if you possibly can just to cover all bases as this is obviously a big descicion you need to make sure you take all proper advice.

If they advise BR then you would stop paying the mortgage and any debts and just carry on paying essentials like council tax, utilities etc. Save the money for house deposit, rent, moving costs and BR fees. Move (making sure you get the utilities to come out and shut off the services and let the CT people know so you can get the 6 months free ) and then go BR.

Make sure that you don't sign anything from the mortgage co. that acknowledges responsibility for the short fall.

Sorry can't advise for IVA.

kepar

You haven't indicated where your income comes from, do you both work or just your husband?

Also it seems to me that you can meet all your commitments at the moment , if you then sold your house you would not have enough to pay any of that back.

Because your debts are small and you are managing there is a possibility that your husband could end up with an IPA. Which means that after the OR has discussed your income and allowances and there is excess then that would be paid to the OR for thee years.

So although giving up your house now, understandably with your health issues you would not have any spare money for that time.

bloom1234

My husband is the main earner and I bring a little and stay home with the children through the week, out at the weekend. He has an account (the one with Debt) that unfortunately is a joint account in my maiden name that could make me insolvent too but going to see about me being removed from it) and I have my own accounts from when I was a student.

The way things are right now we can afford to get by but can't afford for things like me to have my eyes tested for instance (but I do pay for nhs dentist), we cover food and household things ok. We do have sky tv which I know is considered a luxury but I can't say it would be missed much if it went. My husband never goes out and I rarely do. We don't have disposable to pay for holidays although we do manage days out for the kids. Mostly out of child benefit. Very rare that we get any new clothes.

We're repaying 7k worth of debt right now plus the mortgage so if it meant living slim (which we're getting quite good at I think continuing to do so for a few more years is doable).

Also, think I posted earlier about how we have the same tv that was given to us when we moved in, same everything really. Only thing we spent on was kids' rooms and that was saved from child benefit payments.

bloom1234

Just to add that I'm thinking of things we'd need to do before we make any big decisions like taking me off of account. I never use the debit card attached and never went in with my marriage certificate to upgrade so hopefully the bank wouldn't see it as odd behaviour