Help - problem with NRAM post bankruptcy

betterdaysahead

Hi,
I finally got things sorted and went bankrupt last week. The main reason for me doing so was negative equity on a property in England that I have owned from when I lived there. I was also struggling with an unsecured loan.

I am now living in Northern Ireland. I decided to give NRAM a call today to inform them of my situation and so that they could take possession of the property. I was told that they are in the process of taking court proceedings against me and are waiting for a court date. This has scared me somewhat. I was of the opinion that as I have now declared myself bankrupt this wouldn't be possible. Can someone advise me if they can take me to court? And on what basis?

The other point that the girl made was that the secured element of the mortgage (i.e pretty much all of it bar a £5k loan as part of their Together mortgage at the time) wouldn't be included in the bankruptcy, only the unsecured part. I had been advised before going bankrupt that once I had done so, whether it was secured or unsecured would be irrelevant. Once they retook possession and sold the property, any negative equity would be automatically then included in the bankruptcy, as this is a debt that has been secured before I went BR. Wanting to make a fresh break from the property was the main reason for me going BR, a decision which certainly wasn't taken lightly.

Please can someone put my mind at ease??

National_Debtline

Hello there,

NRAM would need to use court action to take possession of the property. You could potentially circumvent this by simply handing back the keys.

The secured aspect wouldn't automatically be included within a bankruptcy. If the house is repossessed (or if you hand back the keys) any shortfall would then automatically go in to the bankruptcy at that stage - so you're absolutely right on that point.

Some lenders may get you to sign a declaration outlining that you acknowledge liability for the shortfall once the house has been sold. You do not have to sign this.

Really hope this helps!

David @ National Debtline.

betterdaysahead

Thank you David for your quick response. This has made me feel a little better about things. I was just so worried when she kept talking about waiting for a court date - I wanted to make sure I'm not in danger of being on the wrong side of the law. Going BR makes people feel bad enough.

Would you suggest I call back and offer to post the keys to them? I want to cause as little hassle as I can to anyone. The girl didn't seem to 100% know what she was saying so has sent an email off to their insolvency department. Oh, and I am definitely aware enough to not sign any forms - for this reason I haven't given them a forwarding address.

Many thanks,
BetterDays

National_Debtline

Hello again,

Sadly I cannot tell you whether or not handing back the keys would be the right thing to do. For most people there can be significant financial implications (for example, the house may be sold for a figure which is less than the true value). In your case, as you have petitioned for your bankruptcy many of these implications are likely to be irrelevant - as any shortfall would end up written-off. We've a useful section about handing back the keys here on our mortgage arrears fact sheet. I think the only potential issue you might face is in relation to the council tax as a lender would generally be regarded as responsible once they have taken possession. Without a court order it may be difficult to show who is 'in possession' at any given time. Really hope that makes sense!

David.

betterdaysahead

Thank you very much again David. This information is invaluable to me. I'll have a think on which course of action I'll go for. My initial thought is to let them go ahead with the court action and then there would be evidence of the date from which they are 'in possession', but I'll maybe see what others recommend.

Again - many thanks. I haven't had any communication from the OR yet and was told by the judge that it may be months rather than weeks as they have holidays coming up. I find it quite strange that they seem to get the summer off! It's good to know that there are knowledgeable people on here kind enough to offer their advice to people like me.

National_Debtline

You're welcome. I can appreciate that you've had to make some difficult decisions of late, so I'm pleased to offer any help and assistance I can

For what it's worth, most of the callers I've spoken to allow the lender to go through the motions rather than handing back the keys.

- David.

fermi

Any shortfall that results from the repossession and sale is most definitely a bankruptcy debt and is covered.

NRAM staff are notoriously ill trained on what is covered and what is not.

http://www.legislation.gov.uk/ukpga/1986/45/section/382

(1) “Bankruptcy debt”, in relation to a bankrupt, means (subject to the next subsection) any of the following—

(a) any debt or liability to which he is subject at the commencement of the bankruptcy,

(b) any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy,

Deano_66

Just watch the Council Tax side of it, as was mentioned above. My property was repossessed by NRAM early December 2013, i had to vacate by 01-01-14 (i'd moved out September '13) They stated they hadn't actually taken possession until early Feb '14 so i was saddled with an additional 2 months extra council tax.

betterdaysahead

Thanks Fermi - nice to know I'm right on that front. I was started to doubt myself as she seemed sure she was right.

Thanks Deano_66. So you did let NRAM take it through court then? What date was your court hearing (just wondering how many months council tax they could potentially come after)? Were you unable to claim that the actual date of the court ruling was the date that they 'owned' the property from? Oh, and did you actually have to attend the hearing? I'm asking as it would be difficult for me to attend now that I live in Northern Ireland.

Many thanks again,
BetterDays

Deano_66

Hiya Betterdays. Yes, i just let them take possession. It happened the first week in December '13, they billed me to the first week in Feb '14, so 2 extra months. I batted emails back and forth with the Co. Tax dept for a bit, but after a call to my O.R, she said i had one of two options-either take them to court, which would have incurred a very large cost, or pay it-for the sake of £70 i thought the latter was the wisest choice. No, i didn't attend, i think very few people do in this instance, would have been an absolute waste of a precious day's holiday from work

Hope this helps you.

betterdaysahead

Haha - good man Deano - couldn't agree more on the day's holiday! Thanks for letting me know - much appreciated.