Going Bankrupt to lose my house

ATECHM

I am not sure if this is the right place so apologies if I am posting in the wrong forum.
My affairs:
I am in the Navy, when I bought our house my plan was to live in with my wife and 3 children, I got posted to Scotland and so moved into Service quarters. I was able to get a tenant in, however after 5 years of letting, the tenant has left owing many months rent, I need a new roof and full re-render plus full redec and carpets throughout. This will cost conservatively £10000.
As a family we have no savings and so cant afford the rework. Also I have to pay the full mortgage without the subsidy of the rental income. If I apply for bankruptcy will I be able to forfeit the house etc and start again clean in six years? I don't even know if this is the right option, below is the rough income/outcome details:
Pay £2600 after tax (includes wives pay)
Car Loan of £2500 at £150 p/m
Tesco Credit card £3400 at £100 p/m
MBNA Credit card of £2500 at £100 p/m
Mortgage Northern Rock £95000 at £770 pm have 18 years left ( never missed a payment) House in current state is worth £65000. Mortgage is split £70000 on house the £25000 was a personal loan to buy it back in 2005.
Overdraft £800
Telephone internet £30
Sky £20
Mobiles £50
Childcare £140
Fuel £20
plus car tax and insurance policies
We have two cars to go to work. Nothing posh.
I don't think we have any items of value that we could sell.
My question:
If I applied for bankruptcy would I be able to loose the house and debt. I still have 6 years left in the services and so would not require my own home until after that. I don't really know where to go with this. Having three children we can't afford abroad holidays and we seem to be living in our overdraft, My credit rating is pretty good, I have never missed a payment it is always my first priority but I cant live like this forever...
Any help or points of direction will be greatly received.

alastairq

Hi..firstly, check out with your Welfare Officer whether you are 'allowed' to petition for BR? [being in the NAVY]

You may be helped & encouraged to deal with the situation without recourse to BR [There are security issues which will need to be addressed.....]

There may be help with financing repair work?

You might be advised to sell the property...but will have to meet the bill for the shortfall.

With BAnkruptcy, only unsecured debt is dealt with.

For the moment, the property mortgage/loan are secured debts, so not covered by a BAnkruptcy.

An Official Receiver would have no interest in an asset [property] in negative equity.

However, if you [or, via a re-possession, the mortgagor]sell the property, then the mortgage /loan become unsecured.

A BAnkruptcy petition sought further down the line [perhaps when you leave the NAvy??] can still deal with that shortfall. It will also cover any other unsecured debts you have [credit cards, etc], regardless..[ie, one cannot pick & choose which creditors to include in a BAnkruptcy]

Your first port-of-call, however, is your welfare system.

longtermplanner

alastairq wrote: »

With BAnkruptcy, only unsecured debt is dealt with.

This isn't correct. Bankruptcy also gets rid of the secured debt. This can present problems if you still want to keep the house, but you don't. With negative equity, repairs needed and other unsecured debt bankruptcy may well be a sensible option.

I have two concerns. First your job - if you would prefer not to talk to your Welfare Officer, try SSAFA https://www.ssafa.org.uk/. Second, are you currently living in Scotland? If you are, then the bankruptcy regime is quite different to that in England.

DevCoder

Also mortgage lenders will ask (or most do) if you have *ever* been bankrupt. Some lenders will refuse on a positive reply to that.

aggypanthus

Do you get Working tax credits? If not .. then look into it. HMRC have a site to estimate it.

perhaps someone else has more detail in it?

ATECHM

I am currently in the process of moving to England. Should be in by August. I will definitely not going through my chain of command for this unless I have to. I am gutted I am in this mess to begin with. Don't think SAAFA charity is going to help In this situation as it's purely a financial problem which needs about £10000 which a bank will not lend for obvious reasons. I don't want to be looking at the same issue in 5 years. Does that sound impractical or foolish?

ATECHM

No don't get any tax credits. I try every year and they still say I earn to much.

HappyMJ

Did you take out the mortgage with your wife?

If so then your wife would be chased for the outstanding secured debt in the event of you going bankrupt.

TheGardener

You could try the StepChange online debt remedy tool at www.stepchange.org - takes about 20 mins to complete if you have all your paperwork and figures - its brilliant and is the first step to working out what the best way forward is. Then, armed with the remedy plan - speak to one of the free, professional debt charities - they are confidential. StepChange itself or National Debtline - both work with you over the phone which is easier if you are currently 'in transit'.
If you do decide (with advice) to take the BR route, most of the servicemen's charities can help with the BR court fees.

ATECHM

HappyMJ wrote: »

Did you take out the mortgage with your wife?

If so then your wife would be chased for the outstanding secured debt in the event of you going bankrupt.

Yes we took it out as a joint agreement. We have a joint account so our finances are joint anyway.

PasturesNew

ATECHM wrote: »

Pay £2600 after tax (includes wives pay)

Car Loan of £2500 at £150 p/m
Tesco Credit card £3400 at £100 p/m
MBNA Credit card of £2500 at £100 p/m

Mortgage Northern Rock £95000 at £770 pm

Telephone internet £30
Sky £20
Mobiles £50
Childcare £140
Fuel £20
plus car tax and insurance policies
We have two cars to go to work. Nothing posh.

Income £2600
Outgoings listed £350 loans/cards, £770 mortgage, £300 for the other stuff.

That still leaves you well over £1000/month to live on.

Can you repeat what the problem is as I don't see it.... you can afford all this, and to live.... so all you're really short of is a way to raise the £10k for the house improvements.... which could probably be done cheaper/more cheaply by rethinking through what's needed and what's wanted.