Is bankrupcy the best way forward for me?

Sandgrownun

Hi Guys

Hope you can advise.

I took out an ill fated NR Together mortgage in 2006 ish when I was very young and very naive. I owe 105,000 on a house that I don't live in and have been renting out I(not agreed by NRAM). I had to move as the house was only 1 bed, and I fell pregnant so took the opportunity t rent a bigger house at £100 less than the mortgage. I've never missed a payment though and for several years have topped up the £150 ish shortfall with the mortgage after the rent.

Tenants are out now, and I have realised that i do not have anywhere near enough money to be a landlord, its not agreed anyway so it would technically be mortgage fraud maybe? So I'm thinking to sell the house.

It's been valued at £70,000 - £75,000 and I have someone poss interested. However then I would owe approx £35,000. I also have credit cards totalling £4000 and an overdraft of £2000.

So as you can see I'm in a big mess. I have a steady secure job (more secure than most but I don't want to reveal the exact nature). I earn about £28,000 but am due to go on mat leave for a year so will earn about half of that roughly for the next year or so. I don't know if I'll be able to go back full time as childcare might make it to be no point, and it's not best for the children. I will always work part time though - I don't want to give up work.

What are my options? Is bankrupcy the best possibility do you think? I can't see how I can pay it back, and I just have to face facts that a astronomically stupid decision when I was much less financially savvy in my early twenties has possibly ruined my entire life (financially at least!).

Hope you can help, many thanks for reading x x

Sandgrownun

Also PS just to add, my partner is financially solvent and (now) good with money. Is he going to be affected by me going bankrupt, we have one joint account for bills and nothing else. The only benefit we claim is Child Benefit, and that is in my name. If I take my name off the joint account then will that protect him?

tigerfeet2006

Welcome to the Bankruptcy (BR) Board. First step is to make a list of all your creditors, debts and assets. Secondly and most important is contact one of the following 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 for your own piece of mind.
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Unfortunatly we can't tell you if BR is the right thing for you as there is so much you obviously can't reveal on a forum. The charities will let you know if it is an option.

Yes make sure you either take your name off the joint account or you close it and you both open seperate accounts. See the above link for BR friendly accounts.

Best wishes
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Sandgrownun

Thanks for your help - I have called stepchange and they are calling me back for a further interview on wednesday so hopefully I will get further forward. I realised that I kind of posted in the wrong place so sorry! I will come back if I am advised to go bankrupt as I will need a bit of support as I'll be devastated I think!

JCS1

Is the £105k you owe on the property just the mortgage or the mortgage and unsecured loan together?

Sandgrownun

Hi the 105,000 is made up of approx 23,000 unsecured loan and the rest mortgage, so 82,000 mortgage? So I will owe all of the loan and approx 12,000 of the mortgage if the house sells for 70,000 which is the likely sale price according to valuations. Also - the loan which is currently 4.49% interest will jump to approx 13% interest, costing me about £250 a month for 35 YEARS!! Which will cripple me.

I think I might re-post my thread on the debt board, would that be a better place?

SteveABC

Would you consider going BR, but keeping the property? The unsecured element of the Together loan and all other unsecured debt would be dealt with by the BR.

Could you then afford to meet the secured debt?

If the house is in neg equity, the OR wouldn't have an interest in it.

You may have to pay an IPA though, but only if you have disposible income left after all resonable expenses allowed.

Take loads of advice.

Sandgrownun

Hi - I wouldn't really mind keeping the house, but the prob is that it'll be too overcrowded as it's a tiny one bedroom and there'll be 4 people so I can't live in it. I could of course rent it, but due to neg equity NRAM is unlikely to let me let it out, they charge a crazy amount of money (thousands) for consent to let agreement, and I'm not a very responsible landlord as I cannot afford to make any repairs - thats how I've spiralled further into debt because I've had to make repairs and cover rent, also gas safety certificates, letting agent fees, insurance etc it's a nightmare. Can I just give it back and then include the shortfall in the bankrupcy? If I'm going bankrupt anyway then I;d rather just start with nothing really.

SteveABC

I had a NR Together mortgage (190K mortgage / 30K Together loan) on a house valued at 175K.

I just walked away from the house (into rented) and went BR. (Secured the tenancy prior to BR).

NR then repossessed the house, (although it took them 9 months), during which time it was just empty.

They eventually sold it for 160K, and all the shortfall along with the Together element fell into my BR.

Sandgrownun

SteveABC wrote: »

I had a NR Together mortgage (190K mortgage / 30K Together loan) on a house valued at 175K.

I just walked away from the house (into rented) and went BR. (Secured the tenancy prior to BR).

NR then repossessed the house, (although it took them 9 months), during which time it was just empty.

They eventually sold it for 160K, and all the shortfall along with the Together element fell into my BR.

This is what i think I want to do - if we could live in it we would, but actually we have been in rented for 3 years. I've decided to do this now as my tenants were nice and also elderly so I did everything I could to keep the house as I hated the idea of it being repossessed from under them. Now it's empty and also I'm due to go on maternity leave in about 3 months so will have a much reduced income for a year after that, I'm thinking it's the right time as I would not be able to make up the shortfall in rent to mortgage or any repairs etc.

lisa.89

Hi, we too had NR mortgage of over 100%... we were int only aswell so not actually paying ot off, then also had to move out due to it being very small. Couldn't sell it so had to rent it out.. what a nightmare that was, turned into a money pitt! Repairs, tenants coming/going etc..

Basically it was repocessed last year, they tracked us down at rented house and letter confims that it was sold and shortfall is £81k, we went BR last week and included this on the forms.

Personally we saw no other option but to let it go it was in loads of neg equity, rate was about to expire, it was int only and we had a huges ground rent bill no pay.

Good luck