Private sale vs Repossession

lindamh42

Hi

I apologise if this is the wrong thread for this post.

I am in a very strange situation and I'll try and keep it brief.

My private house fell into disrepair early this year and I couldn't afford to fix it. I had no heating or hot water as the boiler had broken and there were other structural things that needed doing. I had to move out and find somewhere to rent.

I notified my lender, at that time, and asked if I could sell the house privately. They (GE Money) agreed and I found a cash only investor/buyer through an estate agent who was ready to buy immediately.

Unfortunately, the house is in a negative equity situation and there is a large shortfall. I wrote to GE money and asked if they would accept it in full and final settlement. They declined.

My proposal to contribute towards the shortfall was to enter into an IVA. GE Money declined that too, although it hasn't yet been presented at a creditors meeting so the IVA team are still hopeful.

GE Money then changed their mind about the sale and said they wouldn't release me from the charge if there was a shortfall.

GE Money have changed their minds several times about the sale of the house and delayed the process for 6 months. The buyer made an offer in July. This has resulted in 6 months of arrears occurring and I now have to attend a repossession hearing in a couple of weeks. I cannot afford rent and a mortgage.

If the repossession goes ahead then the shortfall is potentially likely to be even greater than if I was to sell it privately. Surely if they repossess and sell it themselves then they will have to take my name off the mortgage anyway? I have done everything I possibly can to minimise the shortfall and have liaised with GE Money every step of the way.

I am now living in rented accommodation and have absolutely no way of paying the arrears, continuing with the mortgage or clearing the shortfall. I have been in a debt management plan for 3 years - GE are also aware of this.

I'm just posting here to see if anyone else has had anything similar happen and if the Hearing can rule that I am allowed to sell the house privately. The buyer is still interested.

Thank you for listening to me rambling on.

G_M

lindamh42 wrote: »

Hi

If the repossession goes ahead then the shortfall is potentially likely to be even greater than if I was to sell it privately. Surely if they repossess and sell it themselves then they will have to take my name off the mortgage anyway?...

Correct. The Charge will be removed from the property (since no buyer would take on your mortgage!)

However, your debt to them will remain.

silvercar

If they repossess then their repossession costs and the subsequent sale costs are added to the outstanding amount as the interest until the sale date.

So the difference between a repossession and a private sale is that the outstanding amount is higher.

In retrospect you probably should have attempted to agree a repayment plan for them to allow the sale to proceed initially. In effect you would have been asking them to transfer the outstanding amount to an unsecured loan. There was no way they would have agreed to accept the sale price as F&F settlement, as you found out.

Now you should go to the hearing and provide proof that you have a buyer prepared to pay what is a reasonable price for the property in its current state. So show evidence that you have a firm offer and details of comparable properties. The judge could allow you a few weeks grace to allow the sale to proceed. But you will then have to convince the lender to transfer the negative equity to an unsecured loan.

Once the loan is unsecured you can attempt to agree an IVA or consider bankruptcy or whatever else you can do.

If they repossess and sell it themselves they will still chase you for the outstanding amount. But then that loan will be on an equal footing with other debts in IVA terms.