Hello, bankruptsy becoming an option.

bloom1234

Anondebtadvisor wrote: »

If you only have 7kdebts you cannot do an IVA and will have to wait until the mortgage shortfall arises when the house is sold. At the moment the mortgage is secured on the property but when the hosue is sold any shortfall becomes unsecured

That's a scary bit. We'd be at least 15k in 'if' the bank allowed us to accept a low offer on the house. If the council don't want it or a quick buy offer isn't accepted then unless we surrender we're forced to stay or surrender.

There seems to be a lot of schemes out there for people who desperately want to stay in their homes or are struggling to afford it whereas we don't want to keep it. I feel bad because I do have morals but unless I want to keep our circumstances the same and my family in this area it's very likely that we'll go through with it.

kellydobson

Hi. We're in a very similar situation and have been plodding along for ages. We have a house in negative equity which would have 10k-20k shortfall if we were to sell. It is also a NR mortgage and part of it is an unsecured loan so I don't know how this would work out. We also have about 7k in debts. At the moment we can afford to pay everything...just. Sometimes, like this month, we're having to use credit cards again on food and essentials so we can still afford to pay other bills. We love our house inside, it's just the area we live in we hate but can't really see us moving out of here for a good few years yet. We get so down about it all and sometimes think of declaring bankruptcy but not really sure how it all works.
My husband works full time and I'm self employed and we have two children. We also have two cars which we both need for work but I'm assuming these would get taken off us?
Anyway it's nice to read this and know that we're not alone!

silvercar

NR mortgages with unsecured loans - sometimes called NR Together mortgages.

The secured part of the mortgage is secured on the house, the unsecured loan is not secured.

You can sell the house, pay off the secured loan from the proceeds and keep the unsecured loan running. The catch is that the interest rate on the unsecured loan increases to something like 8%+SVR, about 11% at present.

If you went bankrupt, the unsecured loan forms part of your bankruptcy, so is effectively written off. This leaves you with only the secured loan. You need to decide if, without the burden of the unsecured loan and other debts, you can afford to remain in your home.

If you went bankrupt and gave up your home (repossession), the shortfall (from the secured part and the unsecured loan) falls into bankruptcy.

If you go bankrupt before giving up the home or being repossessed, make sure you don't sign anything acknowledging the debt. Provided you haven't signed, the shortfall falls into your bankruptcy. If you go bankrupt after a repossession, the shortfall is included in your bankruptcy.

kellydobson

Thanks silvercar.
So do you think the best thing to do would be to sell the house as we'd probably then be able to pay off the mortgage with what we sell it for anyway, then they'd turn the unsecured loan into a higher interest loan. Rent somewhere and go bankrupt then as we probably wouldn't be able afford to keep up with the extra payments anyway?

sundays

An IVA is normally applied for when there are assets to protect, when there are no assets or a sig shortfall then BR is the solution for most with mortages.

From what you have said you are only proposing BR because of the house being in a bad area and with a massive shortfall.
BR will stuff up your credit rating for a long time and you might struggle to rent off agents which a bad credit.
Yours credit rating most likley would be affected because of your matrimonal association to your husband
Your car should be ok.

BR is also about assessing your income and can any income be given to the creditors /official receiver that fall in the BR pot and can be taken for up to three years and leave you with a limited amount to live on, each case is determined and assessed individually.
You would need to put up a statement of income and expenditure for advice.

Id save and not pay the mortage for the future rental if i planned to go BR, the mortage compnay will prob take a min of 6 months before court action and you wouldnt be chucked out if you defended it, they would just add the arrears on to the term.

But id prob rent myself and rent yours out if your mental health is not good maybe get hubbie to deal with it.
That neg equity will in time change prob for the better and you are still on a good financial footing and on the property ladder. You will certainely struggle to achieve what you have for a good few years.

On repossession they stick a notice in a visible place ie a window once they have changed the locks and normally give 14 days notice for people to make a claim if a claim is needed.

silvercar

kellydobson wrote: »

Thanks silvercar.
So do you think the best thing to do would be to sell the house as we'd probably then be able to pay off the mortgage with what we sell it for anyway, then they'd turn the unsecured loan into a higher interest loan. Rent somewhere and go bankrupt then as we probably wouldn't be able afford to keep up with the extra payments anyway?

It's a plan.

If you definitely intend going bankrupt (and have taken advice that this is the best course of action for you) then there is little point in making an effort to sell the house, why not stop paying the mortgage and save up to find a decent rental (deposit + months rent in advance)?