Going Bankrupt to lose my house

JCS1

longtermplanner wrote: »

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.

Bankruptcy only covers unsecured debt, Alastair is correct.

However, if the secured debt becomes unsecured, such as being repossessed, then any shortfall etc is included.

ATECHM

Thank you pastures new, I should have included food shopping, with a family of 5 we spend easily £500 a month and we shop at Aldi, also need to include gas and electric which is a SO of £200 a month. School money for clubs etc <I know it's not a priority but children cost just to go to school, including uniforms etc>. We don't live a lavish lifestyle, there is just never enough money. Also I don't want the house over our heads. We can't sell it as it's in negative equity. So if I could borrow a lone for £10000 that would surely only put us further into debt.

ATECHM

JCS1 wrote: »

Bankruptcy only covers unsecured debt, Alastair is correct.

However, if the secured debt becomes unsecured, such as being repossessed, then any shortfall etc is included.

If I stopped paying the mortgage, it would be repossessed, which would then become unsecured, is that correct?

This is such a minefield, which I suppose it needs to be!!

Gaz83

If I'm reading this correctly, the OP doesn't want to keep the house, so replies suggesting how he can manage the debts and keep the house won't be helping. I sympathise as I was in a similar position a few years ago.

ATECHM

I have used the step change debt calculator and if I pay only my priority debts each month it leaves me £330 p/m which may cover a loan of £10000 but my calculation does not include the car going wrong, school uniforms, etc etc.

alastairq

If I'm reading this correctly, the OP doesn't want to keep the house, so replies suggesting how he can manage the debts and keep the house won't be helping. I sympathise as I was in a similar position a few years ago

The OP may be compelled to either have the house repossessed, or, keep up payments with a view to eventually selling.

I say this for no other [financial or economical] reason than the OP is serving currently in the Royal Navy.

There are strict UK Forces rules which the OP will be compelled to adhere to with regards to dealing with a debt situation.

Whether the OP likes it or not, the OP may well be compelled to involve their chain-of-command.

However, as I have earlier suggested,the OP needs to speak to Welfare services [or even, Padre?]....to obtain a clear picture as to current RN policy towards insolvency.

Again, I repeat, if the OP goes ahead without informing the relevant COC, the OP may find themselves presenting what is deemed a security risk?

This alone can affect career, trade, etc within the RN.

For the OP, when you state you have '6 years to serve'....does that mean you would be eligible for pensions/lump sums, etc on leaving?

coolcait

I agree with those who are suggesting that you get advice from StepChange, or CAB, or the local council money advisers - preferably as soon as possible.


It really is not at all clear that bankruptcy is the best option for you - especially given your career, as alistairq has pointed out.
Talking to an adviser, and giving them all the necessary information about your circumstances, really is the best first step.

Hanshi1

ATECHM wrote: »

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.

i was in a similar position approx 4 years ago and i contacted step change who were a great help i would advise you to contact them as well. on a personal note i had to go bankrupt as i was to far in debt to do an IVA. our house was eventually taken by the banks, at the time i was told that i could hand the keys back to the bank but my bank would not let me, telling me they had to wait n then take me to court for possession, i would ask your bank if you can hand the keys back maybe. hope i have helped

ATECHM

alastairq wrote: »

The OP may be compelled to either have the house repossessed, or, keep up payments with a view to eventually selling.

I say this for no other [financial or economical] reason than the OP is serving currently in the Royal Navy.

There are strict UK Forces rules which the OP will be compelled to adhere to with regards to dealing with a debt situation.

Whether the OP likes it or not, the OP may well be compelled to involve their chain-of-command.

However, as I have earlier suggested,the OP needs to speak to Welfare services [or even, Padre?]....to obtain a clear picture as to current RN policy towards insolvency.

Again, I repeat, if the OP goes ahead without informing the relevant COC, the OP may find themselves presenting what is deemed a security risk?

This alone can affect career, trade, etc within the RN.

For the OP, when you state you have '6 years to serve'....does that mean you would be eligible for pensions/lump sums, etc on leaving?

Yes I will be eligible for lump sum. Which means I would have enough to clear that house, but that would leave me with a house I could not live in due to its location and I would then not be in a position to get a deposit for a house in a location applicable to my skill set. My thinking is that if I declare BR then in six years my file would be clear, I would then have the lump sum to put on a house I would like to live in

I will speak to HR about declaring myself bankrupt for sure. I would hate to be further in the !!!!..

molerat

[FONT=&quot]RAF QRs have the following so no doubt those for the RN will be similar therefore it would be best to at least speak to SSAFA or similar in the first instance.
[/FONT]

1010. Bankruptcy. Sponsor: ACOS Pers Pol (RAF)

An individual who has a Receiving Order in Bankruptcy made against him or files a Petition for Bankruptcy or who is unable to meet his financial commitments, is to report the facts immediately to his CO. The CO is, if necessary, to report the matter, with his recommendations, to ACOS Manning through the usual channels. Further guidance on bankruptcy is contained in AP3392, Vol 5, Leaflet 121.

1010A. Private Debts. Sponsor: RAF Employment Policy

Detailed instructions concerning the action to be taken on receipt of a complaint that an officer or an airman has failed to honour a financial obligation are contained in AP 3392, Vol 4, Leaflet 1802.