Handing keys to house back and then IVA/Bankruptcy? which first?!

Surfik

Hi there,

I am new to this site and new to the world of bankruptcy/iva's etc so any help would be appreciated, i'm starting to feel a bit stressed trying to get my head around things!!!

The situation is this;

at the height of the property boom we bought our house around 20 miles away from our families (as we couldn't afford to buy in that area), at the time it seemed like a good idea, then the market collasped and I fell pregnant with our first child. I have debts from home improvement loans and credit cards, so does my husband. I was on a dmp before I went onto maternity leave with the cccs but as I have gone back to work part time I dont have sufficient funds to stay in this arrangement.

We are now at the point where we owe 45 k roughly (10 of thats is unsecure loan as part of our mortgage). I have spoken to cccs who advised an IVA may be possible, and have an appointment to discuss this, but we only have £138 left over each month, I read somewhere IVA's can't be set up for less than £275 a month?

Anyways we want to move closer to family as this is where my baby sitter lives and we are struggling with fuel costs back and forth which means we are in a mess finicially without taking debts into consideration. We probably will not be able to sell the house to cover the mortgaged amount, plus we have a flying freehold which makes it difficult for people to obtain a mortgage on it. We cannot afford to keep the house, needs new boiler, new electrics, pointing etc. A finanical advisor said we should just find rented accommodation, hand the keys back to NRAM and go Bankrupt. This sounds scary! (the Bankrupting bit, I don't mind about losing the house as such)

Mainly I wondered if anyone had been in this position and how it worked out for them. Also my husband is not keen on Bankruptcy as he has read that it can affect you for up to 15 years afterwards? would this be the same for an IVA? the IFA seems to think it would be better to just get it all over and done with now rather than wait the 6 years etc. He said he can get us a mortgage a year after discharge if we have deposit etc. How realistic does this sound?

Do we move out first and then hand keys back and then do IVA/Bankruptcy? I really have no clue. Seems
like there is a lot of conflicting advice out there. And am I right in thinking that with an IVA/Bankruptcy they will not take car's, tv's etc from you? my car is worth 1k and my husbands is worth 5k.

I know i've rambled, but I would honestly appreciate any help as I'm feeling pretty weighed down by this situation.

(forgot to add that a friend has offered us his house to rent close to family for £150 under market renting price, would we be silly not to bite his hand of!?)

Looking forward to any replies!

Thanks

Karen

inmypocketnottheirs

Just to help those who will be along to comment, are you in England & Wales or Scotland?

Surfik

Hi sorry, we live in Wales.

Thanks

Karen

IF

Hi Karen and Welcome to the Bankruptcy (BR) Board. Until anyone can advise further re your house please contact one of the other debt charities. Please try these they don't charge and are impartial. They will go through all your options with you and if they suggest bankruptcy then come back to this board and we will help you all we can. Also if your not ‘clicking’ with one of the Debt charities do try another. We advise you to try at least two others for your own piece of mind. Your BR could be refused if you have not sought advice.

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NeverAgain_2

It makes little difference if you go bankrupt first or surrender the house first.

The priority is the next roof over your head.

Some people have trouble renting as a bankrupt, but presumably your friend is OK about that.

The bankruptcy stays on your credit record for six years.

Experiences of getting large loans such as a mortgage after that seem to vary, but it should be possible.

You can begin rebuilding your credit for things such as credit cards and mobile phones after you are discharged, which is usually after one year.

But first things first.

You have £45K debt and say your are struggling month to month even without the repayments.

You could try an IVA, but with only a hundred or two to pay into it each month, it's going to take many years to make any significant impact on your debt.

Bankruptcy is probably your best option.

Surfik

Thank you both for your replies. I will try and speak to the cccs later on today and see what they advise.

Neveragain, our friend is fine with the bankruptcy thing as he is struggling to sell his house (has already moved to another) and needs someone in quick.

I think Bankruptcy just seems like a very big deal, as in the court process etc but realisitically it would be the better option.

Thank you for your help, I'm not looking forward to making the call to NRAM about the mortgage at all but needs must I guess!

Bollotti

We were in a very similar situation, handed the keys back to the house (voluntary surrender), applied for Bankruptcy and moved into rented.

We had to be careful to do it this way, as every letting agent wanted a credit check, but in your situation renting from a friend, it would not make any difference.

Best of luck with whatever you decide to do.

Surfik

Hi Bollotti,

it must have been awful for you but from my perspective its nice to know were not the only ones it has happened to!

Did you have much resistance from the mortgage company? I guess theres not that much they can do about it.

Did you file for bankruptcy on your own or go thro a company? I have spoken to cccs who said I will have to wait for my appointment in June to discuss B with them.

We are pretty lucking having a friend who will rent to us!

spongmonkey

wow, it's a difficult one and a big decision eh? My friend had the same problem and he did things like this:

1. researched the BR process, filled in all the forms and got his head around everything.
2. working out who he owed, got current figures from everyone to make sure he included everything eligible in the BR
3. found a new place to rent and passed the credit checks
4. stopped paying for EVERYTHING included in the pending BR including the house, (you're just throwing money away if you keep paying)
5. saved the money from step 4 for a few months, fending off letters etc from people wanting the money
6. moved house and filed for BR
7. told everyone involved he was BR and gave them the OR details for them to contact them
8. surrenderred the house
9. got a Barclays cash card account and Co-Op account
10. He kept his mobile as the bills were up to date, so that helps a little with credit rebuild

That took into account all the unsecured debt and negative equity in the house.

It does stay on file for 6 years from the date of discharge (discharge is usually 1 year after BR generally in England), and you have to clean up your credit files a few years after BR to make sure all the dates are right.

After that, a year or two after discharge, apply for a Vanquis credit card and pay it IN FULL every month. After 2 months it becomes 0% interest forever as long as you pay it IN FULL each month. This helps build credit rating.

It'll probably still be at least 8-10 years from the date of BR before a new mortgage will even be an option if things in the market stay as they are.

Just my 2 pence worth, and this was a few years ago so I'm sure some elements are not bang up to date.

debtinfo

Hi Surfik, If CCCS cant fit you in try one of the others, national debtline or the CAB. You dont need to use a copmany to go bankrupt unless your case is extremely complicated or you are very incapable.

The process at court is actualy very simple and not difficult to do at all, although having said that it is a big step and despite its ease should not be done without some proper thought and advice

Surfik

Thank you to everyone who has replied. I am feeling a lot better about all of it now, nice to hear things in simple terms. I just kept going around in circles.... one friend told me to hide all our household items around peoples houses, including my wedding ring as bailiffs will take them away!!! This was one of my biggest fears but now I understand this probably won't happenn.

You have all been a big help, if I defo go through with the B I will probably be posting on here again as problems arise!

Thanks

Karen