Which debt solution is right for me?

Delabodes

Hi,

I am a first time poster seeking advice on a solution to my debt problems. My confusion stems from conflicting advice from two separate debt charities.

one charity recommends a DMP, the other either an IVA and or Bankruptcy (specifically stating a DMP was not a good choice)

My situation is as follows (sorry if this next part is a little overloaded with detail, skip first few paragraphs for the numbers):

In May 2007 I alone bought a property in the north of England using an NRAM together mortgage (mainly a repayment mortgage with a joint unsecured loan) we all know what happened a few weeks later.

over 2 years ago I moved away from the north to live my my partner and also for a much better job with greater prospects.

I rented the house for 6 months (took 3 months to get tenants) but NRAM charged me £700 for consent and the rental income didn't cover the mortgage, on top of this the tenants where a nightmare) then it went back on the rental market but no luck in 6 months. so I decided to sell it. The House was on the market for £70K for 6 month without a sniff then it was put back on the market at £60k for a quick sale. I received an offer within a month (last may) for £60K which i accepted having been informed that it would be a quick sale as it was an investor.

we are now in October, the purchaser has not been providing his solicitor or mine with paperwork, not answering his phone and the latest is he is struggling to even get a mortgage offer due to his credit rating.

For the last few months I have been avoiding seeking a debt solution using credit cards to make up my expenses in the hope the sale will go through quickly and i'll be left financially better off. Now it looks like the sale has fallen through I have sought advice and this has led to this email. (note my house is well into negative equity)

My Numbers are as follows:

Income £1750 (all from my employer)

Debt

Mortgage £80,851.00
linked nsecured loan £25,316.00
Santander card £1,006.00
Barclay card £5,537.00
Virgin credit £4,557.00

Total £117,267.00

If the house fetched £60,000 this would leave me with a debt of just over £57,000

My monthly outgoings to pay these debts are: £840.33
(450 for mortgage 390 for loan/cards)

My other outgoings are:
Rent (shared with partner but not linked) 200
Bills (shared with partner but not linked) 125
Council tax on empty house 90
Energy bills on empty house 20
Insurance on empty house 50
gym 30
netflix 7.5
now tv 9
tv licence 12
pet insurance 26
mobile phone 12
dog food 30
petrol 120
all food and groceries 250
car maintenance mot/service 34
dental 10
hair 10
Christmas and birthdays 20

Total:£1055.5

Total Outgoings: £1895

Monthly income: £1750

Phew!!! so clearly my expenditure is more than my in-comings, but what to do??

Having been giving conflicting advice i'm a little confused with what to do, but here are my thoughts.

I'm edging on the side of Bankruptcy at the moment as I just want that noose round my neck (the empty house) gone. I don't live in it and don't see it as an asset as it will have a £20k short fall even if I sell it at the asking price. so i'm thinking voluntary repossession . Currently i'm throwing £700 a month just to have it empty. I have no other assets, not even a car as my partner has two and i use hers for work. I am an engineer so I don't think it will affect my job either.

I looked into IVA but was worried about keeping up what i believe are stringent repayments and then having to go bankrupt anyway.

However the first debt charity recommending a debt management plan has cast a few doubts in my mind especially with the second specifically saying it wasn't a good solution for me.

If anyone has any advice it would be greatly appreciated.

NotEvanAPot

Your debt is too high for DMP, IVA approval doubtful, bankruptcy is your only realistic option.

worriedmamma

I too had a Nram together mortgage, I sold my property in neg equity back in 2011 and struggled to pay back what I had left as an unsecured loan. I've recently had my bankruptcy approved, and the relief since doing so is immense. Being bankrupt so far has been a smooth process whilst daunting at first, its much better than worrying day after day about debt.

silvercar

With a mortgage of over £80k, you are going to have to get the lender's consent to sell for less than enough to clear this. You can't just sell for 60k or 70k and decide to put the remaining amount as an unsecured loan. A secured loan (mortgage) means that the lender has to agree to remove their charge on the property for the sale to proceed. Unless they have agreed to this in advance, the sale can't proceed. No solicitor would allow you to exchange without knowing that there is enough to clear the mortgage or the lender has agreed the sale.

Delabodes

Thanks for answering the question Notevenapot, and your comforting words worriedmamma

silvercar-Only when an offer has been received and accepted will NRAM start the short sales process, have the property valued and decide whether to accept the short sale. In my case the offer of £60k was exactly their valuation and the short sale was approved. However a deadline of 2 months to agree a completion date was set by NRAM which was not met due to the purchaser going dark. NRAM informed me last week (after several extensions) that the short sale account would now be closed and they would start the process again only when a new offer was received or a completion date with the current purchaser agreed.

silvercar

Delabodes wrote: »

Thanks for answering the question Notevenapot, and your comforting words worriedmamma

silvercar-Only when an offer has been received and accepted will NRAM start the short sales process, have the property valued and decide whether to accept the short sale. In my case the offer of £60k was exactly their valuation and the short sale was approved. However a deadline of 2 months to agree a completion date was set by NRAM which was not met due to the purchaser going dark. NRAM informed me last week (after several extensions) that the short sale account would now be closed and they would start the process again only when a new offer was received or a completion date with the current purchaser agreed.

Impressive joined up thinking from NRAM.

As a consequence of this, you would be ill-advised to use the short sale process if you do go bankrupt. I suspect NRAM would require something to be signed acknowledging the debt going forward, if they were to agree to a sale. If you were already bankrupt this would be a post bankruptcy debt and so excluded. Selling and signing before bankruptcy should be OK as all unsecured lending would fall into the bankruptcy.

Of course repossession won't require you to sign anything and would be a safe option post bankruptcy.

NotEvanAPot

silvercar wrote: »

Impressive joined up thinking from NRAM.

As a consequence of this, you would be ill-advised to use the short sale process if you do go bankrupt. I suspect NRAM would require something to be signed acknowledging the debt going forward, if they were to agree to a sale. If you were already bankrupt this would be a post bankruptcy debt and so excluded. Selling and signing before bankruptcy should be OK as all unsecured lending would fall into the bankruptcy.

Of course repossession won't require you to sign anything and would be a safe option post bankruptcy.

Bad advice here. If a Deed of Acknowledgement is signed, pre or post bankruptcy, the OR will in all likelihood disregard the mortgage shortfall in the BR.

In short, do not sign ANYTHING from NRAM. If you choose to go down the BR route, just forget selling the property, let it be repossessed.

silvercar

NotEvanAPot wrote: »

Bad advice here. If a Deed of Acknowledgement is signed, pre or post bankruptcy, the OR will in all likelihood disregard the mortgage shortfall in the BR.

In short, do not sign ANYTHING from NRAM. If you choose to go down the BR route, just forget selling the property, let it be repossessed.

Plenty of advice on this board that anything signed before bankruptcy doesn't prevent the unsecured debt falling into the bankruptcy. In this case the signing of the loan would be the same as any other unsecured loan or credit card debt.

Delabodes

This is where I feel there is a grey area.


NRAM to agree the sale I had to fill out an income/expenditure form and offer an amount I can repay each month to cover the shortfall and unsecured loan as part of a payment plan. This documentation I signed.
NRAM asked I paid more which I agreed on the phone but never signed anything else.


So my queries now are:


A) Due to the length of time to get a completion date, NRAM have closed the short sale account and said the process would need starting all over again once a new offer or completion date is set i.e. assessing income/expenditure, value of the house and repayment amount.
With the short sale account being closed would this not mean my offer to pay back the short fall is now void?


Like SilverCar I was under the impression any agreement made before BR would not have to be fulfilled as the short fall will fall in to the pot of unsecured debt.
Having said that I am only going off this:


Debtcamel - Repossession after bankruptcy

alltaken

Delabodes wrote: »

This is where I feel there is a grey area.


NRAM to agree the sale I had to fill out an income/expenditure form and offer an amount I can repay each month to cover the shortfall and unsecured loan as part of a payment plan. This documentation I signed.
NRAM asked I paid more which I agreed on the phone but never signed anything else.


So my queries now are:


A) Due to the length of time to get a completion date, NRAM have closed the short sale account and said the process would need starting all over again once a new offer or completion date is set i.e. assessing income/expenditure, value of the house and repayment amount.
With the short sale account being closed would this not mean my offer to pay back the short fall is now void?


Like SilverCar I was under the impression any agreement made before BR would not have to be fulfilled as the short fall will fall in to the pot of unsecured debt.
Having said that I am only going off this:


Debtcamel - Repossession after bankruptcy

As always Silvercar is correct.

For interests sake, ask the insolvency service over the phone (they don't bite):

https://www.gov.uk/the-insolvency-service

Please post back so some can get a clearer understanding.

NotEvanAPot

Then the aforementioned advice is incorrect. You may need to broaden your understanding of the law in relation to what the formation of a deed amounts to. You will probably be aware of the phrase "signed, sealed and delivered", but do not know the origin.

A deed is a legal document, variable only by agreement from both parties. The OR, at the request from the creditor party, can refuse to include the debt covered by the deed within the BR estate, as the debtor has entered in to an agreement to repay the debt, no matter what subsequent remedy they may seek following the entering in to of the deed.