bankruptcy and house question

slimzoe

bit of a "just in case" question, i am in the process of setting up an IVA with payplan, have £34k in debt. i really do not want to go down the BR route but want to be prepared just in case. i own a house which i have £3k arrears i am paying off, its a joint mortgage with my soon to be ex husband but i pay the mortgage solely. the house is on the edge of being in negative/equal equity, Payplan used zoopla and value at £111k which would give me £10k equity but the houses either sied of me have both sold in the last year for £98k and £97k so i think that is more realistic (current mortgage owing is £101k)

anyway if i was to go bankrupt would i have to sell the house? would it affect my ex husband?

also can somebody explain bankruptcy to me? how long does it last on your credit file? how much a month would i have to pay and for how long. im starting to wonder if this is the better option than the IVA.

sorry for the thick questions! and thanks for the help so far, without this place i would still have my head firmly buried in the sand!

alastairq

Hi.

For a more realistic valuation, get two or three estate agents to value the house 'for a quick sale'....?

The Official Receiver, who takes control of all assets and finances in BR, is only interested in 'your' assets.....your EX may have some beneficial interest in any equity the house may have....therefore it would be your share of the equity the OR would be looking for.

If the property is in negative equity, the OR's interest may be purchased by you, [or someone you know?] for a nominal sum plus charges.

Since the house is in joint ownership, with..I assume, equal interest....then I doubt there would be a need to sell [to realise your share of any asset value]...unless you EX wishes to take his share?

And, if there is no equity, then his share would be zero.

BR is petitioned when the debtor is insolvent [as in an IVA?]..ie cannot meet their debts as they fall due.

It is a Court Order, and the Official Receiver is charged to realise all the BR assets for the benefit of creditors.

Creditors' being those who hold unsecured debts.....and also includes all creditors, whether identified or not [as long as the debt pre-dates the BR petition]

On the other side of the coin, the debtor is then protected by LAw from any further actions on the part of creditors, to pursue those debts.

In practice, the OR is required to ensure the BR person has sufficient funds to maintain a 'reasonable' standard of living.....before taking any funds which may be in surplus.

If a surplus of income is identified, then the OR seeks agreement with the BR to set up an IPA.....[which can be varied up, down or zeroed altogether depending on the BR's circumstances at the time]...and this is payable [or 'runs'] for three years from date of agreement.


Aside from particular rules applicable to the BR whilst Undischarged, the details of BR remain on the credit files for 6 years from date of petition....and also is recorded forever in the London Gazette.

I suggest you look through the stickies at the top of this forum for an in-depth explanation of BR and its ramifications?

dancingfairy

I'm not sure that an IVA would be much better for you than bankruptcy to be honest. IVAs are normally better if you have an asset to protect (ie a house or car) or your job means you can't go bankrupt.
In an IVA you'd pay into it for 3 or 4 years and would be expected to attempt to remortgage to releaseany equity in your house. As there is none (and is unlikely to regain much if any) you may be required to pay an extra year into the IVA.
Now if you are in a stable job and can virtually commit to making the payments for all these years then great. IF something cropped up and you were unable to pay you'd then have to scrabble around and try and get a full and final to finish the IVA off. Worst case scenario is that the IVA fails and you are then left with the debts again.
The only drawback(s) I can really see with bankruptcy are 1) public perception 2) I believe it is viewed as slightly worse in terms of employment if you go bankrupt and 3) you have to pay fees up front.
Aside from this your debt disspears the day you are made bankrupt (sort of). You may be asked to make payments into your bankruptcy for upto 3 years depending on your circumstances.
So in essence if you go bankrupt you don't need to worry about your circumstances changing and the debt coming back to haunt you and you'd only have to pay for 3 years I think.
I think allowances are possibly similar but bankruptcy ones a little stricter.
It might be worth exploring whether bankruptcy would see things done and dusted sooner for you?
Best of Luck
df