Voluntary reposession

simpywimpy

Im sure I heard that phrase recently. Is this something you can actually do?

A friend of mine is in a house that needs a refurb but cant afford it and has no chance of selling for what he owes on the mortgage. Shortfall I estimate of about 15k-20k.

He is already in an IVA which he hopes will end in december by mutual agreement based on payments already paid.

He is unable to go bankrupt because of his job.

What is the best way forward for getting out of the house?

jamie11

If your friend can afford to continue the mortgage payments then he should keep it. Prices are starting to rise again, in a couple of years he may see some positive equity in it.

In any case if he hands the keys back now is he going to ruin his chance of ever being a homeowner again, banks will sell the property for what they can get and still chase him for the shortfall for a long time (12 years I think)

dancingfairy

Of course, anyone can stop paying their mortgage and give it back. The problem is that obviously the shortall and additional charges will grow and grow and when it is eventually sold the bank will come after you for the money. They can wait until you are back on your feet and then come after you I too think it may be as long as 12 years.
If the amount owed is over a certain amount (1500?) then the bank could seek to make you bankrupt (although whether they'd bother with no assets to reclaim is anyones guess).
You would probably be better trying to get either an assisted sale with help from the mortgage company or by selling via auction. You will of course need to think of some way to repay the shortfall.
Have you tried to contact National Debtline, CAB or stepchange for advice on your situation?
You might also get more answers/more specific answers if you post on one of the debt forums - perhaps the bankruptcy board or the IVA board?
Best of Luck
df

simpywimpy

Thank you. The worry is that they would force a bankruptcy which could result in dismissal from his job. I doubt he would ever own another property at this stage.

We think they would sell for around 45k when he owes 60k on the mortgage and although prices are set to rise, I doubt it would get to that level for some time. There is one in the same area currently on the market for 65k but it is immaculate and in a far better position. Both are ex-council properties.

PlymouthMaid

Could your friend consider getting a lodger to allow him to continue paying the mortgage? I think he would be best advised to hold onto the property if he can as I doubt he will find paying rent any more easy.