Bankruptcy Or Repossession??

NOTAHAPPYBUNNY_5

Hi im new to all this, but im in a real tricky situation here and thought the best people to help me would be you lot who have been through similar circumstances.

JUST WHEN I THOUGHT THINGS COULDNT GET ANY WORSE........

I am currently going through a divorce and originally wanted to keep the marital home (mortgaged £130,000) value approx £140,000 so very little equity. I work part time with 2 small children. Left the marriage with debts totalling £33K so wanted to enter into an IVA. With my ex husbands maintenance we could just about manage to keep everything afloat. The IVA was all set up ready to be agreed with the creditors with me having to pay £190 per month - then my ex decided to give up work through stress(!!!!) and now dont get a penny from him leaving me unable to do an IVA as im now left with a shortfall in my income/expenditure of -£50 per month!!!!

I cant private rent as this will cost more than my existing mortagage which is currently interest only anyway and the council will not help with my rent as I get too much in Tax Credits!!

I have been to the CAB and even they are unsure as what my best options are. I feel bankruptcy is now my only options but if I cant sell the house apparently the Official Receivers can withhold the sale of the property for up to 3 years?? What happens to me and the girls in the meanwhile??

What do you think? If I let the mortgage company repossess i will be eligible for any shortfall so really want this to be included in the bankruptcy? But obviously my creditors to whom I owe £33K will not wait up to a year for this to happen.

Do I try to sell quickly (whatever happens to the house I know I will not gain anything from it financially) and then go bankrupt and hope that the council will not find me intentionally homeless and rehouse me and the children?

OR

Wait for the mortgage company (Northern Rock) to repossess and just keep making token payments to my creditors but surely they will then start issuing CCJS, more stress and if I havent got any spare money to give them then what happens?

OR

Go bankrupt and just hope that the shortfall on the house wont be too great and agree repayments - but then im not totally debt free to start again?

I dont really want to give up working and financially it would not really benefit me to go onto Income Support.

HELP PLEASE!!!!!!!!!!!!!!!!:o

Richard_S

Hi Bunny,

I've only got time for a quick post and even though you must think your problems are overwhelming they're certainly not as bad as some.

I know you've spoken to CAB but I would try CCCS as well, just so that you've got more than one opinion.

In the meantime, if your I&E A/C only shows a deficit of £50 per month why not contact all your creditors and advise them that you've had a setback with your finances and you can only afford to pay them a token £1 per month. Unless any of the loans are secured on the house all they'll be able to do is rant and rave, phone and write and ultimately accept your offer.

That will give you breathing space to decide on what course of action is best for you. I don't want to appear manipulative, but with two small children to care for it does stack things significantly in your favour when it comes to dealing with your creditors.

Best regards

Richard

Richard_S

Hi Bunny,

I thought I was losing my marbles there, I knew I'd replied to your thread but then couldn't see it; you posted your thread twice

NOTAHAPPYBUNNY_5

wHOOPSY I DID SAY i WAS NEW TO THIS!!!

i AM CURRENTLY ONLY PAYING TOKEN PAYMENTS TO CREDITORS AND YES THEY ARE ALL NOW STARTING TO HASSLE ME AS THEY NOW REALISE THE IVA HAS NOT HAPPENED. I AM THINKING SELLING THE HOUSE WILL BE THE BEST OPTION AS I CANT JUST SIT HERE WAITING FOR IT ALL TO COLLAPSE AROUND ME - I HAVE NOW MISSED ONE MONTH MORTGAGE PAYMENT AS WELL!. WHATEVER WAY I GO ITS NOT GOING TO BE NICE BUT SURELY SELL THE HOUSE FOR WHAT I CAN GET AND THEN GO BANKRUPT FOR THE DEBTS AND HOPE THE COUNCIL WILL NOT FIND ME INTENTIONALLY HOMELESS BY TRYING TO MAKE A NEW FRESH START FOR US. THIS IS I THINK GOING TO BE THE QUICKEST WAY TO FREE MYSELF FROM IT ALL. I WILL DEF TRY THE CCCS THANKS FOR YOUR HELP X

Richard_S

NOTAHAPPYBUNNY wrote: »

wHOOPSY I DID SAY i WAS NEW TO THIS!!!

i AM CURRENTLY ONLY PAYING TOKEN PAYMENTS TO CREDITORS AND YES THEY ARE ALL NOW STARTING TO HASSLE ME AS THEY NOW REALISE THE IVA HAS NOT HAPPENED. I AM THINKING SELLING THE HOUSE WILL BE THE BEST OPTION AS I CANT JUST SIT HERE WAITING FOR IT ALL TO COLLAPSE AROUND ME - I HAVE NOW MISSED ONE MONTH MORTGAGE PAYMENT AS WELL!. WHATEVER WAY I GO ITS NOT GOING TO BE NICE BUT SURELY SELL THE HOUSE FOR WHAT I CAN GET AND THEN GO BANKRUPT FOR THE DEBTS AND HOPE THE COUNCIL WILL NOT FIND ME INTENTIONALLY HOMELESS BY TRYING TO MAKE A NEW FRESH START FOR US. THIS IS I THINK GOING TO BE THE QUICKEST WAY TO FREE MYSELF FROM IT ALL. I WILL DEF TRY THE CCCS THANKS FOR YOUR HELP X

Bunny,

A couple of questions:

1. Do you want to stay in the house?
2. Can you afford to pay the mortgage and other essential living expenses if you weren't paying your creditors?
3. Does the house represent a part of your past that you want to put behind you?
4. Are your creditors all unsecured?

What I'm thinking is that if you sell the house you've still got to find somewhere to live. If you can find rented accommodation cheaper than paying the mortgage then that would probably be your best option, but if not there shouldn't be a problem staying where you are.

Don't be afraid to post your feelings as well as the facts. It's an anonymous website, we don't know you and probably never will but it always makes it easier to offer support and advice if it's apparent what your desired outcome is.

Apologies if that sounds like "more questions than answers" but I'll guarantee that once you feel comfortable on this Forum, and confident enough to post openly, you'll get all the support and advice you need. I'm not a "touchy feely" sort of guy but I have to confess that on occasions I have sat in front of the computer weeping like an emotional teenager.

Best regards

Richard

Jonto_3

NOTAHAPPYBUNNY wrote: »

Hi im new to all this, but im in a real tricky situation here and thought the best people to help me would be you lot who have been through similar circumstances.

JUST WHEN I THOUGHT THINGS COULDNT GET ANY WORSE........

I am currently going through a divorce and originally wanted to keep the marital home (mortgaged £130,000) value approx £140,000 so very little equity. I work part time with 2 small children. Left the marriage with debts totalling £33K so wanted to enter into an IVA. With my ex husbands maintenance we could just about manage to keep everything afloat. The IVA was all set up ready to be agreed with the creditors with me having to pay £190 per month - then my ex decided to give up work through stress(!!!!) and now dont get a penny from him leaving me unable to do an IVA as im now left with a shortfall in my income/expenditure of -£50 per month!!!!

I cant private rent as this will cost more than my existing mortagage which is currently interest only anyway and the council will not help with my rent as I get too much in Tax Credits!!

I have been to the CAB and even they are unsure as what my best options are. I feel bankruptcy is now my only options but if I cant sell the house apparently the Official Receivers can withhold the sale of the property for up to 3 years?? What happens to me and the girls in the meanwhile??

What do you think? If I let the mortgage company repossess i will be eligible for any shortfall so really want this to be included in the bankruptcy? But obviously my creditors to whom I owe £33K will not wait up to a year for this to happen.

Do I try to sell quickly (whatever happens to the house I know I will not gain anything from it financially) and then go bankrupt and hope that the council will not find me intentionally homeless and rehouse me and the children?

OR

Wait for the mortgage company (Northern Rock) to repossess and just keep making token payments to my creditors but surely they will then start issuing CCJS, more stress and if I havent got any spare money to give them then what happens?

OR

Go bankrupt and just hope that the shortfall on the house wont be too great and agree repayments - but then im not totally debt free to start again?

I dont really want to give up working and financially it would not really benefit me to go onto Income Support.

HELP PLEASE!!!!!!!!!!!!!!!!:o

Right, assuming the house is jointly owned your interest will only be worth £5k and i am not so sure the OR would look at realising this. You could then make them a token offer to purchase your interest in the property from them. This would tie things and stop them from coming after you in say two years time when the value of the property has risen and your £5k interest is now worth £30k for example. Not sure if this is an option thought if you have negative income each month.

If you went bankrupt and the property was sold it is more than likely that the mortgagee would submit a claim in your estate even though the property was not sold prior to the bankruptcy order, so no need to worry about them coming after you.

NOTAHAPPYBUNNY_5

Ok so are you saying go bankrupt and let them take the property and then sort out with the council about being rehoused??. I am flitting between selling first or bankruptcy first. I am so confused right now got so much going on i cant really see the "best" option for me. IWhat do you think to this....... GO bankrupt and as there is little equity in the house (that is another question - my ex is still on the mortgage even tho he hasnt been here or paid towards it for the past 14 months) he has agreed to sign his share of equity over to me but i have to pay £750 solicitors costs to do this which i dont have at the moment) ANYWAY he is now considering bankruptcy himself how will this affect the house if i chose to stay here (and if the OR lets me). When you all say about token payments to the OR to close his file etc etc do they want this all in one go and for me to keep the house what sort of "token payment" would i be looking at here? I am now thinking go bankrupt try and keep the house (maybe extend the mortgage up to 35 years (only 16 years left) to lower the monthly payments. Will mortgage company allow me to do this once I am bankrupt? and i guess if i cannot then manage sufficiently i can always then sell in a couple of years and be no worse off than i am now. Thanks for your advice, so many things to get your head around xx

NOTAHAPPYBUNNY_5

Thanks Richard,

Im trying to stay emotionally strong and just deal with it day to day before the reality of it all kicks in. Still trying to contend with the divorce at the same time!!!! ARRRRGGGHHHH.

All debts are unsecured so thats not a problem. The decision about the house, im in two minds about. It is a part of the past I would like to leave behind, it also eats into me and I feel i have failed in some way but is also part of the future for my girls. Once im off the housing ladder will i ever get back on??? I really dont know how i would cope living in some grotty hostel with druggies and alcoholics (and yes that is what it is like where we would end up - obviously there will be some other half sane people like myself there as well) with two small children waiting months for a suitable property to come up - but i would do to get what i need (I am a determined little madam mind!!!! hehe).

If i stayed and continued to pay the mortgage would the mortgage company allow me to extend back up to 35 years (only 16 years left) and I would then remove my ex at the same time (he has agreed to release his share over to me) so that i was the sole owner. If I am bankrupt how does this affect having a mortgage???

AlanD_3

I'm afraid I have little advice on the Bankcruptcy front but Dawn and I have been through some of the things you are worried about happening.

After she was attacked years ago (when I was but a student and our finances were entirely seperate... aside from paying halfs on meals out, lol) Dawn went from having 3 jobs to not being able to work and had her home repossessed. Not a pleasant experience for her to say the least and it took a serious mental toll on her. At that time she did end up in the local emergancy housing. Big place with bedsit appartments. Not actually that bad inside the rooms but shared with druggies etc as you said. It wasn't a pleasant experience and she spent as much time as she physically could away from there with her parents or myself. She got through it. Not nice but you endure.

A few years ago when we got into our current mess with the business etc we were evicted from a housing association place. Nasty business especially as we'd gotten ourselves into such a state that we had no idea that it was about to happen (it happened when we were in Scotland for my grandmother's funeral... really nice coming home presant). We had to sort out all manner of things (not least being getting access to the flat to get our stuff back). At that time we were married AND had a small child.

We stayed with my parents for a couple of nights and they wrote a letter to the council to explain that this was an impossible situation.

The local council bent over backwards to help. They were constrained by rules and regulations regarding eviction but as we basically turned up there with a baby on our arm, in tears, being very nice and nondemanding they did what they could. I, for some reason, had never been on the tenancy of the flat. Therefore I was not culpable for the debt. Therefore I could (with my family) be rehoused.

So we went on the list.

It took 9 months to be rehoused.

We did not end up in the hostel. I don't know if this is the same siutuation where you live but it is a key point I wanted to make and something you may want to look into if your advice takes you down this route.

We were terrified we'd end up in the scummy bedsit place with all the wonders of humanity on display but they made it very clear to us that they DO NOT put families in there. They also made it clear that they DO NOT put families in a certain local "hotel" (one with !!!!!! piped into the rooms for free and room charges that start with an hourly rate) both of those places were reserved for singles and on rare occasions couples... NOT for families.

We ended up in bed and breakfast for 9 months. A reasonable sized room, not huge but reasonable with room for a cot. We had breakfast included in the rent (heavily subsidised by housing benefit) BUT we had to eat out for all meals. The council did apologise (as did the CAB). They both explained it is a nasty irony that if you are poor and can't afford a new place to live they will charge you more to live in B&B with no food preparation facilities meaning you have to live off the goodness of friends and takeaways while you are there (the latter ending up costing you an arm and a leg).

We were lucky. While I was waiting for my PGCE application to go through (heck once you've reached the bottom it is time to do something with your life, right? Besides which at that time it had gone from being too expensive to do to being a good financial option as they paid me a salary to do it) I was managing a fish and chip shop (part of a local chain I had worked for a number of times in the past when between jobs, a good way to always avoid unemployment for me I'm lucky in that they will always take me back as a manager, although I've made it clear now that last time was REALLY it, no more!) so I could get most evening meals free for us and a discount on sandwiches at lunchtime from another of their outlets.

Being made homeless is never easy. It is much harder with kids. We found, however, that it focussed our minds and we immediately made ourselves very well know features at the CAB and Council office. I would strongly suggest that if you are going to go down this route you find out what will happen to you.

It was not the worst experience of our lives to be in B&B. It was costly and we put on weight. We lost sleep because the baby was in the same room as us. It was humiliating but the landlord was nice. The actual living accomodation was very pleasant but it wasn't home. It was, in short, 9 months of frustration and hassle but we endured. If this is the option your local council will take you down it IS livable with (provided it is a reasonable place and I think there is guidance on what counts as that). It isn't the same as living with the druggies. It is endurable rather than dangerous.

Another thing to check is that your council will loan the cash for your things to go into storage. Ours does but I'm not sure if this would be the case if you are BR (but I don't see why not).

I hope this helps. See the local CAB as they will have specific knowledge of what the rehousing situation is with your council and housing associations.

Take care and remember that you have each other.

Alan

Miss_Scarlett

Personally I would just file for bankruptcy and let the OR have the final say in what happens to your house. Selling brings a whole can of worms which just complicates things. The OR might decide that there is no equity and therefore you get to keep the house. I've read somewhere that houses tend to be undervalued for the purposes of OR sales. Of course if you can't pay your mortgage it's better for you if the OR/mortgage company just take it.

I would start by making some calls to your council now and inform them of the situation. You might be able to start the ball rolling for housing right away. A friend of mine was in a similar situation and she moved into her lovely council house before the OR took her property, so she had the easiest move in history, bit by bit transferring things from one house to another. I do think the council house option might be the best for you. Good luck and let us know how you get on.

Richard_S

NOTAHAPPYBUNNY wrote: »

Thanks Richard,

Im trying to stay emotionally strong and just deal with it day to day before the reality of it all kicks in. Still trying to contend with the divorce at the same time!!!! ARRRRGGGHHHH.

All debts are unsecured so thats not a problem. The decision about the house, im in two minds about. It is a part of the past I would like to leave behind, it also eats into me and I feel i have failed in some way but is also part of the future for my girls. Once im off the housing ladder will i ever get back on??? I really dont know how i would cope living in some grotty hostel with druggies and alcoholics (and yes that is what it is like where we would end up - obviously there will be some other half sane people like myself there as well) with two small children waiting months for a suitable property to come up - but i would do to get what i need (I am a determined little madam mind!!!! hehe).

If i stayed and continued to pay the mortgage would the mortgage company allow me to extend back up to 35 years (only 16 years left) and I would then remove my ex at the same time (he has agreed to release his share over to me) so that i was the sole owner. If I am bankrupt how does this affect having a mortgage???

Good afternoon Determined Little Madam ,

If you go bankrupt before speaking to the mortgage company about extending the length of the mortgage it will probably make it more difficult. I'd speak to the company first and explain about the divorce and your changed financial circumstances and see what they say; if you've never missed mortgage payments in the past and your confident that you'd be able to meet the payments then you have a reasonable chance of them accepting. They'll be very wary about taking legal action to repossess when there are children concerned; the Judge will usually give you every opportunity to make a reasonable proposal to the mortgage company.

Other than speak to one of the debt charities there's probably not much more you can do at this stage.

Hope this helps, if only a little.

Richard