Bankruptcy with a mortgaged house?

ferry

Hi

Just after some quick advice for a work colleague.
He has a house with an estimated £150k worth of equity but with around 32k of debt may consider bankruptcy
Just so I can be of some help to him before he registers on here later what advice can you guys offer for to him in his position?
I guess he really wants to know if he will get to keep his house as he has children?

Thanks
F

antrobus

ferry wrote: »

...I guess he really wants to know if he will get to keep his house as he has children?...

I believe that the answer would be 'No'. Although I think that the OR may well defer the sale of the house for a time in order to allow alternative housing arrangements to be made.

ferry

Thanks
I guess he'll pop in later with more questions

antrobus

ferry wrote: »

Thanks
I guess he'll pop in later with more questions

Of course, what your work colleague should do is take proper advice from somebody like StepChange. Rather than rely on what is said by Random People on the Internet like me.

TheGardener

Why go BR when your assets are worth more than the debt? It might seem illogical? Can he secure the debt against the house?

JCS1

Based on the bare facts given, i suspect it would be a rare case of where BR wouldn't be granted (or even advised) as they are not technically insolvent.

Anondebtadvisor

With equity at that level the trustee will want to dispose of the property asap so a 3rd party will need to make an offer or the trustee will evict them and sell it.

He should consider alternative solutions f he wishes to keep the house such as secured loan or an IVA

longtermplanner

An IVA will not be approved by his creditors as he has too much equity.

Going bankrupt and getting a third party to make an offer for the equity is not sensibel, as the offer level would have to be for all his debts plus the costs of bankruptcy which will be considerable, think 10k minimum with amounts of 30k+ being possible.

His choices are to sell the house or re-mortgage it or get a secured loan.

Rrushi_Shqiptar

He will loose the house if declared bankrupt but if the children are under 18 and in full time education there is the chance they can keep the house until they reach 18 or finish their education.

I was advised of this but I was still forced to sell the hse and my children were 13yrs and 8yrs and obviously in education.

I suggest he gets advice from one of the charities

woodformoretrees

Selling the house and paying off the debt would be cheaper than going bankrupt.
I've never heard of anyone being able to hold on to a property until their kids leave full time education (unless of course that is going to happen within the 3 years limit)
Has he looked in to a DMP until he can sell his property?

JCS1

Rrushi_Shqiptar wrote: »

He will loose the house if declared bankrupt but if the children are under 18 and in full time education there is the chance they can keep the house until they reach 18 or finish their education.

I was advised of this but I was still forced to sell the hse and my children were 13yrs and 8yrs and obviously in education.

I suggest he gets advice from one of the charities

If it's the family home the OR has 3 years to deal with the property, but will do nothing for the first year.

Not sure where the under 18/in full time education advice came from.