equity in house

James_Carlton

Am considering bankruptcy to clear various unsecured loans, CCs, other debt, etc, totalling approx £80k.

Have house valued at £135k. Mortgage OS at £55k. Secured Loan at £22k. Secured bank Overdraft at £22k.

Am I correct that this leaves equity of £36k, split 50/50 with my wife as co-owner.

Total personal equity £18k.

I understand that it is possible for co-owner to buy equity back to prevent sale of house.

My questions on this are:


1) I understand it is usually possible to stay in house for a year, but is this the norm - could OR decide to sell the house, say, a few months in and simply not entertain any buy back offers, leaving us high and dry?

2) I've heard the normal point at which the OR will call in the equity is 2yrs 3 months. Can the OR call it in before the 2yrs 3mnths if he sees fit.? Likewise, if my wife is in a position to buy it back before that date, can the OR refuse and drag things out to the full 2yrs 3 months....or even the 3yr max time given to deal with the property.

3) Will secured lenders be informed of the bankruptcy, even though these debts are not part of the bankruptcy? If yes, could my mortgage lender and secured lender - once they hear of the bankruptcy - insist that the house is sold (even though I will be able to maintain repayments during and after the bankruptcy?


Any advice and clarification on the above appreciated.

I'm kind of convinced bankruptcy is the route but need to know exactly where I would stand as regards the family home before taking the plunge - have heard so many myths! Over and above any other considerations, I would not want to lose the house.

Thanks.

National_Debtline

Hi James


Your calculation of your equity looks broadly correct to me. I've given some answers to your questions below in bold.

James_Carlton wrote: »

1) I understand it is usually possible to stay in house for a year, but is this the norm - could OR decide to sell the house, say, a few months in and simply not entertain any buy back offers, leaving us high and dry?


This is most unlikely in normal circumstances. I suppose that if the OR had reason to believe that the bottom would fall out of the housing market (again) within 12 months they might want to speed things up. If there are "buy-back" offers on the table at market value, the OR will normally give these a chance to go through rather than just selling your home to A N Other.

You and your family will normally be allowed up to a year to make alternative living arrangements - but of course it's best to start making such plans at as early a stage as possible.

2) I've heard the normal point at which the OR will call in the equity is 2yrs 3 months. Can the OR call it in before the 2yrs 3mnths if he sees fit.? Likewise, if my wife is in a position to buy it back before that date, can the OR refuse and drag things out to the full 2yrs 3 months....or even the 3yr max time given to deal with the property.


This is the point by which the OR will have aimed to take some positive action re: the property. If they haven't, a review process will begin at this stage. Realistically, the OR is likely to have either sold the property by this point, or at the very least obtained a charging order on it in order to be able to sell at a later stage if circumstances require it.

3) Will secured lenders be informed of the bankruptcy, even though these debts are not part of the bankruptcy? If yes, could my mortgage lender and secured lender - once they hear of the bankruptcy - insist that the house is sold (even though I will be able to maintain repayments during and after the bankruptcy?


In practice, secured lenders will become aware of your bankruptcy one way or another, even if it's just as a result of seeing credit report updates or checking the Insolvency Register.

Bankruptcy will not normally have the effect of automatically terminating an existing mortgage contract, for the very reason that as a secured creditor the mortgage lender's debt is excluded. Any mortgage arrears that you accumulate before, during or after bankruptcy could be enforced in the usual way. The mortgage lender's rights to repossess in the event of arrears would trump those of the OR.


Any advice and clarification on the above appreciated.

I'm kind of convinced bankruptcy is the route but need to know exactly where I would stand as regards the family home before taking the plunge - have heard so many myths! Over and above any other considerations, I would not want to lose the house.

Thanks.

How far have you looked into your alternative options? Depending on circumstances, an Individual Voluntary Arrangement (IVA) may offer you a way to clear your debts and protect your home, but I'd suggest you stick up a Statement of Affairs (SoA) so that we can offer you fuller advice.


SoA template:


http://www.stoozing.com/calculator/soa.php


IVA guide:


https://www.nationaldebtline.org/EW/factsheets/Pages/26%20EW%20Individual%20voluntary%20arrangements%20%28IVAs%29/Default.aspx


Dennis
@natdebtline

James_Carlton

Thank you for advice Dennis. I'm not over keen on IVA idea, given lengthy period it is over and the possibility of having to remortgage house at end. Have heard a lot of horror stories about people ending up paying as much if not more than the original debt in the long run. I'm also convinced my majority creditor (a trade associate) would not agree to it.