Looking for some advice

Jasonmusicman1

Hi all to cut a very long story short me and my wife are bout to declare bankruptcy, we have been on a debt management plan with step change for about 3 years now but it's not just the unsecured debt we are struggling with, we have a mortgage with a £30,000 secured debt consolidation loan on it, which is secured for the next 25 years, we are currently struggling to pay anything as we have 3 children and finding it extremely difficult to live with the debt we have.

We have spoken to step change and on there advice we are going bankrupt.

The questions I have are as follows.

1. To be able to include the secured loan in the BR we have to give up the property to allow the secured loan to become unsecured is that correct. If so what is the normal time frames off us to have to find a new place to live before we get repossessed, we have been instructed by step change not to pay the mortgage and secured loan so we can get together the money to go bankrupt.

2. Is there anyway to keep the house, I can't see any other way to get the secured loan included other than give up the house.

3. Are we better waiting for the property to be repossessed or should we just find a property to rent and move out.

4. My property is in negative equity so selling it isn't an option and the secured loan company says they will refuse to let us sell it if there is going to be a shortfall.

5. What options do we have regards bank accounts as we are now looking to set up a new account prior to us declaring bankruptcy.

6. If the property is repossessed are we responsible for it until it is sold, or does that responsibility go to the bank.

many thanks in advance.

We have started filling out the paperwork and it seems very daunting

.regards.

Jason

egrescrimp

When I told the bank a few years ago that I was giving them the house back, it took about 6 months from the point of contact to sale at auction. Before you tell the bank anything, make sure you have somewhere else to live!

The secured lender is unlikely to give up their claim on the property, so keeping the house will be very hard if not impossible.

Prior to bankruptcy you can get a cashminder account with the co-op, don't mention you intend togo bankrupt though. They should then allow the account to stay open when you go bankrupt. Once bankrupt you can get a barclays basic account even when not discharged.

with regards to be responsible are you talking about repairs etc? I wouldn't put anymore money into the house unless it's an emergency situation such as your electrics blow or something like that. Use any spare money you have to save for a rental property and your bankruptcy fees.

tiggerbodhi

Answered from experience....

1. To be able to include the secured loan in the BR we have to give up the property to allow the secured loan to become unsecured is that correct. If so what is the normal time frames off us to have to find a new place to live before we get repossessed, we have been instructed by step change not to pay the mortgage and secured loan so we can get together the money to go bankrupt. Correct, as you are in negative equity as well all monies owing after the repo from the Mortgage, secured loan fall into your BR, the time frame from stopping paying to repo really depends on the lender, some are quicker than others and depends what you tell them, but in general terms you will be ok for three to four months, the one note is that you must sign NOTHING from your secured loan lender and mortgage company reference repo, they might hide in letters and agreements that you are liable for shortfalls after sale.

2. Is there anyway to keep the house, I can't see any other way to get the secured loan included other than give up the house.
Probably not if you want to clear the negative equity and secured loan, if you go BR and there is no equity you can stay but still would need to pay the secured loan and mortgage.

3. Are we better waiting for the property to be repossessed or should we just find a property to rent and move out.
Which ever suits you best mentally and financially, if you do move out you are responsible for the council tax and building insurance until the mortgage company take formal possession, although some councils will reduce or stop CT.

4. My property is in negative equity so selling it isn't an option and the secured loan company says they will refuse to let us sell it if there is going to be a shortfall.
When it is repo'd all the outstanding negative equity and secured loan fall into your BR, clean slate time.

5. What options do we have regards bank accounts as we are now looking to set up a new account prior to us declaring bankruptcy. Open a Barclays or Co-op Account before going BR, use this for your essentials and salary, both these are BR friendly, but Co-op wont let you open one once you are BR.

6. If the property is repossessed are we responsible for it until it is sold, or does that responsibility go to the bank.
Once it is formally re-possessed you are no longer responsible for it, up to the point of repo you are responsible for building insurance and keeping it secure, also the council tax, if you have moved out, check it every couple of days, also chase the mortgage company to repo it.

We have started filling out the paperwork and it seems very daunting, it can be, there are plenty of people on here who have been there, got the tee shirt and will give you good friendly advice, good luck, I can only say the peaceful sleep and relief once done is tangible

longtermplanner

You cant keep the house unless you keep paying the mortgage and secured loan.

Are we better waiting for the property to be repossessed or should we just find a property to rent and move out.

Whichever suits you best. As you have children in extremis the council will rehouse you. But if it was me, I would want to feel in control of the process and have the best possible choice of where to live, especially with children where location and schools matters. That suggests the following order

1) save up deposit for somewhere to rent by not paying anything to unsecured or secured debts - this is more important than getting together bankruptcy fees
2) move out and hand back the keys. Don't sign any paperwork as tigger says
3) settle in. claiming housing benefit if you are now able to do that and start saving up bankruptcy fees. You don't have to both go bankrupt at the same time. Go to your local CAB and they may be able to help you find a charity that will assist with bankruptcy fees.