Trying to make a final decisions on Bankrutcy and future housing!!!

csfts

Hello everyone,

I am a newbie to this site and firstly I have to say wow, Thankyou, this site has helped me realise we’re not alone with our struggles andthere can be a way forward! And most importantly NOT to be ashamed andembarrassed!!!

I just need advice onhow best to take the jump into Bankruptcy! I thought if I share my story,others may have had similar experiences and could share and advise, it would beso greatly appreciated!!!

As background my husband and I have been in a DMP with Pay Planfor over 4 years managing around £18,000 debt which is slowly rising due to interestsand charges. We have an interest onlymortgage/loan of about £122,000 with Northern Rock (NRAM) around £20,000 is asecured loan and £2,000 unsecured all from the original mortgage taken out over7 years ago. Our house is only worth £105,000 if we’re lucky so a huge negativeamount.

Our finances gradually worsened as each of our two childrenwere born and both of us were working and paying fulltime childcare, reduced topart time but last year I left employment to focus on my two under five yearsolds as I was actually only earning about £200 on 30 hours after paying tax,travel and childcare and my eldest who just started school is being diagnosedwith Asperger Syndrome meaning childcare was a nightmare for both my child andthe child minder’s, very stressfully for me who just wanted to stay at home andlook after my own children and so glad I am now and my eldest has made massiveprogress since I did. But this leaves us with just my husband’s income of £17,000a year plus child tax credit and benefits.

Therefore we have never been able to afford an IVA or verymuch towards our debt management plan to make a difference. We live quite far from my eldest’s school(appropriate for her needs) and use public transport which is soo expensive andunreliable in the Medway towns. We wouldlike to live closer but cannot move because of the negative equity and cannotobtain further credit due to DMP and have no surplus income for savings.

We have umm’d and arrr’d about Bankruptcy for the past yearand have sought advice from the National Debt line and Pay Plan and they bothagree we are eligible for bankruptcy but cannot be sure if we will lose ourhome or not. Pay Plan have stopped our DMP and told us to stop paying all debtsand save, save, save for Bankruptcy if we want to go Bankrupt.

If were entirely honest we would prefer to lose the houseand then rent, closer to the school, preferably with a housing society/council orprivately where we will be entitled to an element of housing benefit accordingto the direct gov benefits estimator site. However we can just about afford therent on our own. Its howwe lose the house and what other housing options we will have that reallyconcern us????

We understand the secured loan may force repossession etcand then become unsecured once the house is sold during bankruptcy but the ‘may’is the scary bit! We also think we know we could just give the keys back as wewill not have to pay mortgage after bankruptcy?

When does the council kick in and help??? I thought if you voluntarygave up the keys etc you could not get help?

We are only one monthin arrears with our mortgage and really don’t know if it is best to just stoppaying it and use the money to save for a rental property? We have no savingsat all, we would need at a guess at least 4 months of non payment (our paymentis usually £615.00) to use as a deposit and rent on new house plus removalcosts but also need the cost of going bankrupt so another two months missedpayments! That’s 6 months; surely the mortgage company would kick us out beforethat?? So many people have said otherwise across these forums???? Please advice!!!

The National Debt line put us in touch with a charity thatmay be able to assist us with the costs of bankruptcy; we have applied and areawaiting the outcome!! If we are one of the lucky ones it will defiantly takeus less time to save to rent!

Thank you everyone, I look forward to your input ;0)

silvercar

We are only one monthin arrears with our mortgage and really don’t know if it is best to just stoppaying it and use the money to save for a rental property? We have no savingsat all, we would need at a guess at least 4 months of non payment (our paymentis usually £615.00) to use as a deposit and rent on new house plus removalcosts but also need the cost of going bankrupt so another two months missedpayments! That’s 6 months; surely the mortgage company would kick us out beforethat?? So many people have said otherwise across these forums???? Please advice!!!

You don't have to do it all in one move. If you decided that repossession and bankruptcy were the right choices for you, then stop the mortgage payments and sort out a rental. Once you are in your rental property you can save up for bankruptcy.

We have an interest onlymortgage/loan of about £122,000 with Northern Rock (NRAM) around £20,000 is asecured loan and £2,000 unsecured all from the original mortgage taken out over7 years ago. Our house is only worth £105,000 if we’re lucky so a huge negativeamount.

Please clarify these figures. Does the £122k include the secured loan?

If were entirely honest we would prefer to lose the houseand then rent, closer to the school, preferably with a housing society/council orprivately where we will be entitled to an element of housing benefit accordingto the direct gov benefits estimator site. However we can just about afford therent on our own. Its howwe lose the house and what other housing options we will have that reallyconcern us????

Council help varies by area. It may be just a list of helpful landlords. I would start looking for private landlord properties in the area you want to move to and enquire about housing association and council waiting lists.

Maizy

Hi there

Just want to say welcome and I totally empathise with the situation you are in. We were in a very similar situation and in the end decided to let the house go, couldnt see the point when it was in such negative equity, didnt feel we could afford the upkeep and many other reasons besides. We needed a fresh start with zero debt.

We simply stopped paying our DMP, secured loan and mortgage, bombarded with phone calls whilst we saved for moving/BR fees. Secured a house (hope to get social housing at some point in future) moved out, went BR two months later and the house was repossessed a few months after moving. We are a third way through our BR year, it has been tough and extremely stressful but now sitting on the other side, we feel free and can see a future ahead where as before we couldnt see anything other than working like ships that pass in the night and total stress.

BR is a last resort but if its the only way out, then going forward life will piece itself back together, you and your family come first. We are much happier these days too. Good luck.

hisandhers1978

Hi csfts,

I wanted to reply and share my experience with you. We had a very similar situation with the housing and reduced income due to having a child and other things.

The first thing we did was move out of the house. I would strongly advise that you look at what private rented accommodation you can get in the area you need to be. That way you can get settled and have that in place. You should also not pay anymore repayments on your debts/mortgage and use that to get moved/settled.

Northern Rock will take a good 6 months to reposess the house. You can hand the keys back and do a 'Voluntary Reposession' but they would ask you to sign something called a 'Deed of Acknowledgement' which could make you legally liable for the shortfall. We looked into all this and ended up letting them just reposess the house through the courts, and all the shortfall went into the bankruptcy. Only at the point of reposession (or a few weeks before) would the local authority be informed and support with housing assistance be offered but its a long process and with children, I am sure you want to be settled. Plus, once you are BR, getting a private rental might be difficult.

I would file for bankruptcy once you are settled, the reposession will take care of itself and all the shortfall will go in and get dealt with.

I'll be honest with you, its not a nice process but its the best thing we ever did. I was discharged in March and I feel like my life has purpose now and I am not working for nothing and the entire thing is absolutely nowhere near as bad as you think it will be. Far from it. Life is much better now.

If you have any questions or need any support please feel free to inbox me anytime and I wish you and your family all the best.

lisa.89

silvercar wrote: »

You don't have to do it all in one move. If you decided that repossession and bankruptcy were the right choices for you, then stop the mortgage payments and sort out a rental. Once you are in your rental property you can save up for bankruptcy.



Please clarify these figures. Does the £122k include the secured loan?



Council help varies by area. It may be just a list of helpful landlords. I would start looking for private landlord properties in the area you want to move to and enquire about housing association and council waiting lists.

Hi there,

We are going through a simular experience to you (we also live in Medway).

We are just deciding when to hand keys back and go into rented.. we have decided to hand on as long as we can by saving non mortgage and secured loan payments.. it will be harder to save for BR when you are paying rent each month. I We were advised that it will take 3-6 months before reposession proceedings begin..

I rang around a few medway letting agents over weekend and advised that we are in an IVA (Didnt say anything about BR). As we are working, they said we should be ok with a guarantor. Your guarantor needs to be earning 36 x your monthly rent - £23k for £650 rental...they do not need to own their home. Admin fees are usually around £150 plus £75 for each additional person.. you can try private landlords through paper but there is not loads in paper right now.. will do some more research on this though..

We share your concerns about it all as it is a big step.

L x

csfts

silvercar wrote: »

You don't have to do it all in one move. If you decided that repossession and bankruptcy were the right choices for you, then stop the mortgage payments and sort out a rental. Once you are in your rental property you can save up for bankruptcy.

Thanks, it's so scary just stopping mortgage payments, but we know this is what we have to do! but we have no savings and the only way we can get togther any money is to use our money that we would pay our mortgage with still needing to remain living in our home for a few months until we have saved enough! So scared the mortgage company will try and kick us out before we have had a chance to save for rental deposits and removal costs ;0(

Please clarify these figures. Does the £122k include the secured loan?


It's included! £122 total amount.

Council help varies by area. It may be just a list of helpful landlords. I would start looking for private landlord properties in the area you want to move to and enquire about housing association and council waiting lists.

Lisa, hisandhers1978 and Maizy
Thankyou hearing your storys are amazing and really help strengthen our decision to stop paying so we can save to move out asap! your info is so valuable to us!

May I ask how did you handle the non stop calls from debtors, did you ignore and just send letters? Or did you speak to them? Did you just tell them your putting together the funds to apply for bankrutcy? usually the DMP managed it all!
and for Northern Rock, do we tell them were not paying because were applying for bankrutcy or fob them off? they're calling everyday and I dont answer because I really don't know what to say at the mo!!

Thank you everyone!!! your all :A's

csfts

lisa.89 wrote: »

Hi there,

We are going through a simular experience to you (we also live in Medway).

We are just deciding when to hand keys back and go into rented.. we have decided to hand on as long as we can by saving non mortgage and secured loan payments.. it will be harder to save for BR when you are paying rent each month. I We were advised that it will take 3-6 months before reposession proceedings begin..

I rang around a few medway letting agents over weekend and advised that we are in an IVA (Didnt say anything about BR). As we are working, they said we should be ok with a guarantor. Your guarantor needs to be earning 36 x your monthly rent - £23k for £650 rental...they do not need to own their home. Admin fees are usually around £150 plus £75 for each additional person.. you can try private landlords through paper but there is not loads in paper right now.. will do some more research on this though..

We share your concerns about it all as it is a big step.

L x

#

Lisa (or anyone else who may know!)
If we can not find one guarantor will they split it with two people willing to help us do you think?

hisandhers1978

Hi csfts - in honesty, we unplugged the phone until we had been declared BR and then plugged it back in the day after and quoted the BR reference. We never got bothered again after that...

live'n'learn

Things will get better, although i am yet to go through BR due to the increased fees my home has already been repossessed and we have been given a council house and we are so much happier to have moved. Things may look bleak but keep your chin up as you will come through this and if its going to happen try not to get too stressed as there are many people who have been and will go through the same thing..

csfts

livenlearn wrote: »

Things will get better, although i am yet to go through BR due to the increased fees my home has already been repossessed and we have been given a council house and we are so much happier to have moved. Things may look bleak but keep your chin up as you will come through this and if its going to happen try not to get too stressed as there are many people who have been and will go through the same thing..

Would you mind elaborating how? Did you wait until the absolute last minute where they forced you out of your repossessed home and then go to council? We do have family who could put us up for a few days if we waited that long but we really do not want that ;0( Do the council places you in temp accomadation etc ??

csfts

hisandhers1978 wrote: »

Hi csfts - in honesty, we unplugged the phone until we had been declared BR and then plugged it back in the day after and quoted the BR reference. We never got bothered again after that...

Ha Ha so tempting!!