Dont want my house anyway!

Seagray

Hi

I am considering bankruptcy or sequestration as it is here in Scotland.

Its all in my name... whats in my husbands name we could manage.

I have been with a debt management scheme for years. Owing 18k

I was self employed until october 2012 & im now unemployed. My tax returns are in & the tax I owe is considerably more than I had expected or saved for.

So... my house was valued 2 years ago at £150k. The mortgage is £94k and im not in arrears, but its on the market now for offers in the region of 105k
However...we put in on the market 2 years ago hoping to sell it & clear the other debt. But it hasnt sold.

Will the courts look at the value of the house or the saleable value?

Thing is....I dont want the house anyway. .....but rather than being scared I might lose the house...im scared I might have to keep it!! Its too big..its too expensive to keep warm...its very old & always needs repairs!

Do u think I will end up keeping it if I file for bankruptcy.?
Because of the potential low equity?

Also..its in my name & has been for 10yrs & 3yrs prior to meeting my husband. BUT....is he liable for anything? (He works full time but his wages wont cover outstanding debt & living costs)

Mouse1812

Seagray wrote: »

..its in my name & has been long before I married my husband....is he liable for anything?

Nope, but he might have an equitable interest in it

Seagray

What does that mean exactly?.....will we/he have to pay anything re the house? and if the house doesnt get taken from us... are we still liable for the mortgage?

Mouse1812

No, he will not have to pay anything - it’s not his mortgage.

However as he has been living with you, contributing to the household, he may have “acquired” some right to the value in the property. It does not matter if he did not pay the mortgage, he paid other bills so that you could.

This is known as an “equitable interest”. The law recognises that when someone pays towards something (even indirectly) they could acquire some share of its value.

The amount of his interest will depend upon how long he lived with you and how much he paid over the years towards the other household costs.

You may have £10,000 left over after the property is sold. Your husband may be able to claim some of that. Hence my smiley.

If the house is sold and there is no money left over, the shortfall will go into your bankruptcy, even if that happens after discharge. Your husband will not have any liability for that.

Only you are liable to pay the mortgage. If you go bankrupt you only have to pay if you want to KEEP the house. Stop paying and the mortgage company will take and sell it.

To speed the process up you could stop paying the mortgage now, move out and start paying rent elsewhere. Mortgage company will eventually repossess and sell as quick as possible. The only “cost” to you would be the possible loss of your husbands “equitable interest” but that might not be much anyway. Against that loss you will save several months of mortgage payments.

Seagray

Mouse1812 wrote: »

If the house is sold and there is no money left over, the shortfall will go into your bankruptcy, even if that happens after discharge. Your husband will not have any liability for

To speed the process up you could stop paying the mortgage now, move out and start paying rent elsewhere. Mortgage company will eventually repossess and sell as quick as possible. The only “cost” to you would be the possible loss of your husbands “equitable interest” but that might not be much anyway. Against that loss you will save several months of mortgage payments.

What if the house doesnt sell? Afterall it hasnt sold for me in years!!

And can I really just move out? Could I just use the money set aside to pay my tax (albeit less than needed), pay a deposit on a rented place & move?

coolcait

Mouse's excellent post sets out what could happen with the house.

However, under the Scottish system there are some differences when it comes to property. If you are the sole owner of the house, then the full amount of equity vests in your trustee. End of.

It doesn't matter what your OH has paid towards bills, or upkeep - or anything else - over the years.

If you were desperate to keep the house, then you could try to negotiate some kind of settlement with the trustee - but your strongest card would be the fact that court action would be much more expensive. And the negotiating room would be limited.

However, since you don't want to keep the house, all of Mouse's suggestions would be a possibility.

Also, if your trustee in bankruptcy works out the equity in the property based on the current valuation less the outstanding mortgage, he/she might propose selling the property. So, all you'd have to do would be say 'yes', and sign the forms saying that you agree the trustee should sell the property. Then wait.

skintandfat

In Scotland they value the house in the first 6 months and work out the equity at this point.

You can sign forms and they will try and sell the house.

Remember you will not get a mortgage for around 15 years (if atall) if you go BR, so this is a large step.

There may be little or no equity in the house, so in this case you should be able to buy the beneficical intrest for £515.00

They will do a drive by valuation and take it from there.

Remember if you decide to stay in the house the house will pass back to you should they decide not to sell. From this point the house no longer vests with the Accountant In Bankruptcy and as long as you keep paying the mortgage it remains yours.

In other words you could write off all your unsecured debt, keep the house and free up your income you were using to pay debts.

You mentioned you have money saved up to pay tax- it is important you don't dispose of this income recklessley.
Keep it in the bank and let the OR know about it.

You will need a legitimate reason to spend it (for example if the boiler packed up and you decided to keep the house). It will be looked upon poorly if you dispose of money prior to going bankrupt.

Mouse1812

Seagray wrote: »

What if the house doesn’t sell? After all it hasn’t sold for me in years!!

It will sell, they will put in into an auction just to get rid of it. The (significant) shortfall will be added to your bankruptcy and written off.

Seagray wrote: »

And can I really just move out? Could I just use the money set aside to pay my tax (albeit less than needed), pay a deposit on a rented place & move?

Bankrupts are allowed to live somewhere - so yes. Indeed it would be sensible to sort your affairs now because once bankrupt it could be difficult to arrange. It must be reasonable though, please don’t go and rent Aldourie Castle.

If before bankruptcy you need to use the tax savings for everyday living then that will be OK, but as skintandfat says don’t spend it on any luxuries. Household provisions are exempt assets (which means they don’t come and remove the tins of beans from your cupboards).

You are allowed everyday furniture and equipment for your basic living needs. If you need a new fridge or toaster and kettle, that will be fine. Just buy basic stuff.

They never asked why I bought a new cooker shortly before going bankrupt, in fact none of my pre bankruptcy spending was questioned because it was all household stuff (no holidays, cars or gambling).

If you are 100% certain that bankruptcy is right for you, then I would stop paying the mortgage and find alternative accommodation. Buy any essential things you need and make sure the cupboards are not empty.

coolcait wrote: »

under the Scottish system there are some differences when it comes to property. If you are the sole owner of the house, then the full amount of equity vests in your trustee. End of.

Thank you coolcait, I stand corrected - I keep forgetting things are different up there.