NRAM full and final settlement or BR?

thinkpositive1

I could post this on the mortgage forum but have been most involved in this forum as I am 95% convinced BR is my only option now.

To cut to the chase: I have a mortgage + loan with NRAM. I live with my partner now so the mortgage is on my former (now empty) home.

I believed I would be in a lot of negative equity if I sold the house and this would only add to the other factors (3 years into an IVA but been unable to pay for a few months and the IVA is breached, plus tax arrears) which are all pointing me in the direction of BR.

I have been getting plenty of advice and started drafting BR paperwork but have had my house valued today. Had 3 valuations all coming in around a similar figure and confident of a quick sale with a lot of demand in that area for that type of house and not enough supply.

My NRAM situation is that I owe them £205K. £180K is the secured part (mortgage) and £25K on the loan...was unsecured but is technically "secured" via a charging order...(long story: when took DMP out I was advised to put this loan into the DMP pot. NRAM never agreed to reduced payments and eventually took out a charging order to "secure" the loan).

My IP and NRAM have both advised me that if the house is sold for more than the secured amount owed then NRAM will automatically get whatever else is obtained as they have "second charge". Say it sells for £185K, they get £180k to clear the mortgage and get the £5k towards the loan.

The valuations today all come in at a few grand more than the secured amount. This has got me thinking if I could offer NRAM a "full and final settlement" to clear everything I owe them and still leave me a few quid over to pay IVA arrears, tax and get the IVA back on track and not go BR.

Or am I kidding myself this is an option? It is in NRAM's interest to get me to sell the house (likely to get more ££ than a repossession and less hassle for them) but if they get to keep all the money from house sale I might aswell go BR (which I do not say lightly).

The idea of offering a reduced amount to NRAM was put in my head by the 2nd valuer who had this mortgage + loan and also knew someone with the same type of mortgage and circumstances as me...who sold up, offered NRAM 80% of his outstanding balance and did a deal with them.

Anyone think this is possible?

OutofDebt-NOT-OutofDanger

Worth a try, but do remember your costs in selling the property yourself.

In your example of selling @ £185k, after estate agent fees, legal fees and council tax you would probably only just clear the mortgage let alone any of the 2nd charge and that assumes that there are no early redemption charges.

Whether NRAM accept this or not is anyone's guess (maybe if they knew that the alternative was to get less with more hassle they might, but in my experience, logic rarely features on banks decision making!).

Sorry can't advise on whether or not you can "restart" the IVA - I guess your IP would be able to tell you this.

silvercar

My NRAM situation is that I owe them £205K. £180K is the secured part (mortgage) and £25K on the loan...was unsecured but is technically "secured" via a charging order...(long story: when took DMP out I was advised to put this loan into the DMP pot. NRAM never agreed to reduced payments and eventually took out a charging order to "secure" the loan).

Whether they will accept your plan may depend on whether the unsecured loan is really secured against your home. If it is, then they are less likely to agree to any F&F settlement. If you were selling the home first, clearing the mortgage as part of the sale, then offering a lump sum in F&F payment you may have more luck. NRAM having secured the loan seems to rule that out.

Another option may be to inquire if NRAM would support an "assisted sale".

thinkpositive1

Well after a chat with my Insolvency Practitioner and Business Debtline Advisor - who both said NRAM wouldn't be up for accepting a reduced amount through a full and final settlement.

One last try - phoned NRAM, gave them the real figures (for a quick sale) the estate agents gave me yesterday which would cover the secured loan / mortgage only and they said they wouldn't accept less than I owe them.

The said if I sold it and repaid the mortgage, they would look into options for repaying the loan based on Inc/Exp but that won't stack up for me.

The last possible solution (to avoid BR) has been explored and failed and therefore bankruptcy here I come!

longtermplanner

You have done your best, it does sound like it is time to push the B button.

thinkpositive1

longtermplanner wrote: »

You have done your best, it does sound like it is time to push the B button.

Cheers LTP..yes..after 2 months or more of intensive research, advice and exploring every option I feel I have got to reluctantly press the B button.

I guess many if not all people who get to this stage go from the "ok, this is the only option I have / this is the right thing to do" sense to flipping back to the nagging feeling there is another way out.

At least I have explored everything I possibly can that I am aware of, had fulsome and sound advice and whilst I never wanted to be in this position, I am and have to deal with it.

silvercar

The said if I sold it and repaid the mortgage, they would look into options for repaying the loan based on Inc/Exp but that won't stack up for me.

Does that suggest that they would let you sell without paying the loan that was originally unsecured? If so, you could sell and then negotiate with them a settlement.

thinkpositive1

silvercar wrote: »

Does that suggest that they would let you sell without paying the loan that was originally unsecured? If so, you could sell and then negotiate with them a settlement.

Well if I sell it, the valuations for a quick sale less the fees and conveyancing costs etc would likely leave only £2k to £4k over and I have a £25k loan outstanding. Not enough to make an offer that they'd accept I think and they have the loan secured via a charging order. Even though it will become "delinked" upon sale, anything raised over and above the secured amount I owe NRAM will go straight to them anyway

silvercar

thinkpositive1 wrote: »

Well if I sell it, the valuations for a quick sale less the fees and conveyancing costs etc would likely leave only £2k to £4k over and I have a £25k loan outstanding. Not enough to make an offer that they'd accept I think and they have the loan secured via a charging order. Even though it will become "delinked" upon sale, anything raised over and above the secured amount I owe NRAM will go straight to them anyway

Interesting. I would have thought that either the loan is secured and needs to be paid off in full on sale or the loan isn't secured and on sale the £2-4k left over would be returned to you. (At which point you could either do some negotiation for a F&F or offer them whatever you can afford at the moment.)

thinkpositive1

silvercar wrote: »

Interesting. I would have thought that either the loan is secured and needs to be paid off in full on sale or the loan isn't secured and on sale the £2-4k left over would be returned to you. (At which point you could either do some negotiation for a F&F or offer them whatever you can afford at the moment.)

the loan is secured and they will take whatever they can to pay this off in part from a house sale. Balance on secured loan is 180k. Balance on "unsecured" loan is 25k but this is technically secured via a charging order and anything I sell the house for over and above the 180k they get automatic call on the cash generated as the 2nd charge (I am advised)

e.g. I sell house for 185k, 180k pays off mortgage and 5k goes to Nram towards the loan

I sell house for 190k, that pays mg off and 10k towards the 25k outstanding on the loan. I sell for 195k (unlikely) and 15k gets knocked off the loan, still leaving 10k debt

basically the balance left on the loan would then be negotiated as "shortfall" - either try and get it agreed into my (failing) IVA or do monthly payment for years to Nram to clear it.

the only way to avoid bankruptcy is to sell the house for more than the 205k I owe Nram in total, and then use any surplus to pay IVA arrears, tax arrears

Regrettably there seems no room for negotiation.

That said, if I hand back the keys / they repossess, then they will likely get less than the 180k in a quick repo sale and if I go BR they will be getting nothing more.

It is in their interest to get as much as they can (which would be via me selling and looking at maybe 185k, potentially some 10k more than they'll get in a repossession) but I have no room to negotiate it seems.

silvercar

So they would allow the sale to proceed ie relinquish their charge (s) on any amount over £180k.

Of course, you could sell, let them take whatever the sale yields and then start negotiating with them on the shortfall. There would be no point in them making you bankrupt as you have no assets, so the loan would continue until such a time as they accepted a settlement. You may be surprised how little they would settle for to clear you off their books.

That said, if I hand back the keys / they repossess, then they will likely get less than the 180k in a quick repo sale and if I go BR they will be getting nothing more.

A repossession is immaterial once you have a bankruptcy on your credit record. If you were seriously thinking of this (and why not, given you will see nothing from the sale), you may as well stop paying the mortgage now and save up a rental deposit.