House/ Mortgage queries

styeffo

Hi i'm probably about a week away from being out of work,i have the prospect of another job but at the moment i am a director in a company that to my mind has no chance of survival, one of my colleagues does not see it that way.

There is probably around £60K debt from the business, including £25k overdraft/loan to TSB (joint & several)...

I am wondering what the situation is regarding my home , which i share with my wife and 14 yr old daughter should it come to BR?

I have probably around about 25K equity in the house after mortgage and 30% market value to pay the Housing Assocaiation if we sold the property as they have the 2nd charge and helped us purchase the property.....

Does the Housing Association having 2nd charge help us as regards keeping the house if i go BR?

If the house is taken, what happens as regard mortgage repayments etc???

Would they continue, or would ALL debt be struck off via BR?

ALL advice greatfully received.

S

Conor_3

Mortgages and secured loans aren't included in bankruptcy. If there's joint loans/debts, the other co-signee is chased for the money.

Basically half the house becomes the ORs. Your wife has to either buy that interest off the OR or you sell the house. If, including the 30% charge on the house, there's no equity, you still have to buy the ORs interest in the property otherwise they can claim it in the future. In the case of a house with no equity in it, there's a flat fee to pay which AFAIR is about £250. For the reason I outlined about the future, it's important to secure the house as early as possible because it'll become more expensive to in the future as the price rises and there's more equity in it.

IF the house is sold either by you, the OR ordering a sale or the mortgage company repossession and there's a shortfall, i.e it sells for less than the outstanding mortgage/secured loans on it, then you're liable for the outstanding amount.

styeffo

So even after Bankruptcy, still liable for mortgage???

How does that work???

fermi

Where all parties liable for the mortgage are BR, if the house is in negative equity and it is sold by the OR/mortgage company/re-possessed then the shortfall becomes a debt that is included in the bankruptcy. This has recently been confirmed by the OR in several cases.

I believe that if you wish to retain the mortgage and any rights to title on the property, then the OR will often allow you (or an interested third party) to purchase that right/equity for a nominal £1 plus legal fee's.

From: http://www.insolvency.gov.uk/guidanceleaflets/home/home.htm

Jointly owned properties only: What should be done if someone wants to buy the beneficial interest?

If an insolvency practitioner is handling your bankruptcy, then your husband, wife, partner, relative or friend should contact the
insolvency practitioner for information on what to do about buying the beneficial
interest.

If the official receiver is handling your bankruptcy, your husband, wife, partner, relative or friend should contact the official receiver. They may be able to take part in a property conveyancing scheme run by The Insolvency Service and a firm of solicitors.

Under this scheme, the beneficial interest can be transferred back to you, or the beneficial interest and legal title can be transferred to your husband, wife, partner, relative or friend.

Please note they will have to pay:

For a solicitor or licensed conveyancer to act for them in the transaction;

• £211 (as at August 2005) to cover the official receiver's legal costs. This amount must be paid in advance. It includes an allowance for expenses that may be incurred in the transaction. If the allowance is not fully used, they will receive a refund;
• the cost of an independent valuation unless you already have a very recent independent valuation of the property;
• the agreed purchase price for the beneficial interest based on the valuation. If your home is now worth less than the amount you still owe on it, the price of the beneficial interest will be set at £1.

They will also have to give the official receiver up-to-date details in writing of the amounts that would be needed to fully pay off the mortgage and any other charges on the property.

If your husband, wife, partner, relative or friend cannot afford the costs of the scheme at present, they may still be able to take part later. They should contact the official receiver about this.

If, later, they approach the official receiver to buy the beneficial interest, and the property has increased in value, the purchase price is likely to be more than £1.

If the home is mortgaged, the lender may have to agree to the sale - the solicitor or licensed conveyancer dealing with the transaction will be able to advise on this.

Solely owned properties: What should be done if someone wants to buy the beneficial interest?

The official receiver or other trustee can transfer both the beneficial interest and legal title to you (usually after your discharge from bankruptcy) or to your husband, wife, partner, a relative or friend, but the transaction is more complicated if the property is solely owned. If you wish this to happen, please contact the official receiver or trustee for details.

In this type of transaction, there is no fixed-price property conveyancing scheme, but costs similar to those listed above must be paid.

Once again with something as important as your home, it is best to seek professional advice on the consequences of bankruptcy in each individuals situation.

Conor_3

fermi wrote: »

If the house is in negative equity and it is sold by the OR/mortgage company/re-possessed then the shortfall becomes a debt that is included in the bankruptcy.

Not correct according to the professional advice given. In joint mortgages, the other party is liable for the full amount left outstanding. If a sole mortgage, any shortfall can only be included in bankruptcy if it was incurred before banking.

The advice being given 8 weeks ago by a person who advises the Govt on bankruptcy and runs an advisory service.

fermi

Conor wrote: »

Not correct according to the professional advice given. In joint mortgages, the other party is liable for the full amount left outstanding. If a sole mortgage, any shortfall can only be included in bankruptcy if it was incurred before banking.

Sorry Conor. I was referring to a mortgage in a single name for that bit, or one where anyone else liable also goes BR, so it is correct. Should have made it clearer.:D

The available official info on property, BI, and BR is confusing at best (and sometimes contradictory). Even the OR's office seems unsure sometimes.

As I said, for something as important as your home it is vital to get proper professional advice.

Property and BR is a pain in the ***!

styeffo

Thanks for your replies.....keep them coming if they shed further light.

Richard_S

Conor wrote: »

Not correct according to the professional advice given. In joint mortgages, the other party is liable for the full amount left outstanding. If a sole mortgage, any shortfall can only be included in bankruptcy if it was incurred before banking.

The advice being given 8 weeks ago by a person who advises the Govt on bankruptcy and runs an advisory service.

Conor,

I never say anything is a fact unless I know for certain, and in this instance you are wrong; not my opinion, not something I think, you are 100% mistaken.

The regulations state that any debts, or potential liabilities that may result in debts in the future, at the date of bankruptcy are included in the estate. Any shortfall of a mortgage, even if the house is sold after the bankruptcy date is included.

Richard

styeffo

Having spoken to my friend who's a Bank Manager he has said that it would be very unlikely that it would come to BR over 25K which is covered (in theory) 3 ways....

wherediditallgo

That's good to hear, but to be honest, styeffo, I wouldn't take that as gospel. I really think you should get some professional advice from organisations who deal with people in your circumstances on a regular basis, such as the ones I named in your other thread, & who can advise you without friendship being a factor. People have been made BR for a lot less than what you potentially owe, & you need proper advice regarding your home, the business & your personal liabilities.