Mortgage: Voluntary repossession after BR?

fermi

jpr_74 wrote: »

Well this was the response I received:

"I refer to your letter received on 31 July 2015. I am sorry that you have had cause to complain and thank you for taking the time to bring this matter to our attention

I understand your complaint to be that you believe as you have previously been declared bankrupt the mortgage was included in the bankruptcy and you therefore no longer responsible for this debt.

I have reviewed the account and note that the information you provided you were declared bankrupt on 7 June 2010 and we have received the documentation to confirm this.

I also understand originally the account was in joint names with ***** ***** who sadly passed away in January 2015 and whose name has therefore been removed from the mortgage.

I can confirm that when a mortgage is taken out in joint names both parties are jointly and severally responsible for the mortgage debt.

I also have to advise that while a mortgage can be included in a bankruptcy this is dependent on the lender agreeing to this. If the lender choses to rely on their security for the mortgage debt, which is the property, the mortgage is then not included in the bankruptcy. I have to advise that Paratus AMC Limited would always choose to rely on our security for the mortgage.

I can confirm therefore that as the sole remaining borrower you remain liable for the mortgage debt despite being declared bankrupt in June 2010.

I am sorry that you have had cause to complain, but I am unable to uphold your complaint in this instance. The mortgage was not included in the bankruptcy as we did not agree to this and chose to rely on our security for the mortgage debt"


Can Paratus do this and where do I stand with regards to this and my bankruptcy?

I have already contacted the receiver and they said that the property was included in the bankruptcy and they had also contacted Paratus 2 weeks ago on my request. So far I have had no response from them.

The are talking a complete load of bollux.

Read the links in my original response.

They can choose whether to rely on their security or not, but that is a separate issue as to whether any shortfall or resultant unsecured debt is a bankruptcy debt or not.

They cannot opt out of any resultant unsecured debt being covered by the bankruptcy.

It's a fairly typical response from a lender though, being either deliberately dishonest in their response, or wholly ignorant of the law. Which is anyone's guess.

silvercar

Reply, along the lines that you understand the mortgage wasn't included in the bankruptcy, but under bankruptcy law any resultant shortfall once the property is sold is an unsecured debt and does fall within the bankruptcy.

jpr_74

This is the reply I have had from the receiver:

"A creditor that holds a charge against a property at the date of bankruptcy can rely on their security and if you default on the loan they can enforce their security in accordance with the terms of the loan.

If they decide to take possession of the property due to accrued arrears and they suffer a shortfall following resale after the repossession, then your liability under the secured loan will be a provable debt in the bankruptcy proceedings."


Can someone clarify this for me? The way I see it, there were no arrears when I went BR, and my ex continued to pay the mortgage until her death. There have been no arrears. There are arrears now since her death as no payments have been made by myself.
So if the property is sold now and there is a shortfall, am I liable for those arrears?

owlet

No, you are not liable unless you have signed something from the mortgage company accepting liability. You had the mortgage before you went bankrupt so as Fermi says, any debt arising from that is covered. Any shortfall after repossession becomes an unsecured debt & is covered by your bankruptcy.

Just don't sign ANYTHING!

jpr_74

So should I let them chase me for payments, take me to court and then repossess the property? Or let them voluntarily repossess the property.

I guess my credit file will be affected and any future mortgage either way?

silvercar

jpr_74 wrote: »

So should I let them chase me for payments, take me to court and then repossess the property? Or let them voluntarily repossess the property.

I guess my credit file will be affected and any future mortgage either way?

Is there any equity in the property? Find out what it is now worth if you were selling on the open market. You know the value of the mortgage and the arrears, but you don't appear to know the other side of the equation.

Did your ex have an estate ie other money when she passed away? I'm wondering if there was some money and the lender feels entitled to some of it?

jpr_74

I doubt there is any equity in the property, the mortgage is interest only and I don't want to spend time valuing the property. They are threatening litigation.

My ex had no will and no estate as far as I know and we were tenants in common.

Is it likely that Paratus know there will be a shortfall at point of sale and are trying to recoup some money?