Should I go bankrupt?

angie85

Hello,

I moved overseas with my husband and our young children a few months ago. He secured a job following being made redundant in the UK. Our family home is solely is his name and is being rented out. The rental income doesn't cover the mortgage at present but we cover this deficit as part of our monthly outgoings. We have no joint accounts and no credit cards, I have one small personal loan in my name which again we cover each month.

I have three properties, two in my sole name and one I co-own with an ex partner.

Property One - Owned with ex partner under an interest only mortgage. Currently in negative equity but the rental income covers the mortgage.

Property Two - Owned by me under a capital payment right to let mortgage. The rental income almost covers the mortgage payments each month and no equity.

Property Three (The Problem) - Owned by me under a capital repayment mortgage. The property has been vacant for some time as my lender would not grant a right to let mortgage. It has been on the market for three years but has not sold despite reducing the price many times.

We have been using all our savings to pay the mortgage on Property Three in the hope it would sell. As a result we have no savings left and can no longer afford the Mortgage payment. Even if our lender were to grant a right to let, we would never recover on a monthly basis the mortgage amount.

If i move back to the UK and work full time this would barely cover nursery costs and food, let alone enough to pay the large mortgage.

I am running out of options and hope. Bankruptcy seems so extreme but I can't see any way out of this mess.

I'd be so grateful for any advice.

TIA

WhenIam64

Our family home is solely is his name and is being rented out

You may have 4 properties and not 3. They will be taken over by the OR as trustee. Are you wanting to throw in the towel and leave it to the OR to sort out at a cost?

angie85

I don't understand why there would be a fourth property? The mortgage on the family home is and always been been solely in my husbands name. Could he be pursued for my outstanding debts?

Can you please explain what OR is an acronym for?

I don't want to throw in any towels and I am hoping to learn about other ways to get out of this mess?

WhenIam64

The mortgage on the family home is and always been been solely in my husbands name.

The OR will be looking not just at title, but at "beneficial interest" - whether there has been a direct or indirect contribution to the purchase of the property. It won't be clear if it exists until you talk to the OR or a lawyer. This is why there could be unintended consequences to your deciding to be bankrupt.

If there is an interest, then there could be a charge against the family home to the value of the interest which would make selling it an issue depending on the value of the interest.

You really should take specialist advice from a debt charity about the whole situation as the matter may be taken out of your hands by the mortgage holders.

Clouds88

I also don’t think you can go bankrupt if you do not ‘live’ in the uk? Just wanted to add that but I agree you need specialist help because this is complex.

angie85

Thanks for the advice.

Yes I will have to move back to the UK to resolve this. Although I have read as long as I have lived in the UK at some point in the last 12 months that should be ok.

TheGardener

OR = The Official Receiver, the person who will deal with your case if you go bankrupt.


The issue of beneficial interest in your partners home should only be an issue if there is evidence you contributed materially to things like the deposit to buy it or to major renovations. The OR will also consider how long you have lived in your partners property and whether you have made regular contributions to the up keep of the home.

No - the OR can not pursue your partner for your debts unless they believe you gave your partner assets as less then they were worth so for example - you cleared their credit card bill before you moved in or sold them an expensive car for nominal sum.

As others have said you have a complex problem with the properties you do own and you need UK based legal advice on dealing with them.

You can go BR in the UK so long as you meet certain criteria which are explained here

foxy-stoat

Stop paying all mortgages, keep the rental payments and wait for the lenders to write to you to repossess the properties, then you can voluntarily give them up...your EX will be in for a shock and will have to pay the mortgage on that property and will have to pay for it when the mortgage term runs out or sell it and pay the negative equity on their own.

Once you go bankrupt you can draw the line in the sand and walk away from these burdens of debt and bad choice of becoming a landlord.

WhenIam64

your EX will be in for a shock and will have to pay the mortgage on that property and will have to pay for it when the mortgage term runs out or sell it and pay the negative equity on their own.

Property One - Owned with ex partner under an interest only mortgage. Currently in negative equity but the rental income covers the mortgage.

FS. Don't think you've read that properly. OP and Ex are not paying the mortgage on the joint property. The tenant is.

Property 3 is the issue and if a BTL is not available, then an interest only could be a solution but assume that is not possible if there is a high LTV in place.

foxy-stoat

WhenIam64 wrote: »

FS. Don't think you've read that properly. OP and Ex are not paying the mortgage on the joint property. The tenant is.

Property 3 is the issue and if a BTL is not available, then an interest only could be a solution but assume that is not possible if there is a high LTV in place.

I dont think so, Property one has an interest only mortgage that the OP and the Ex are paying, they are using the tenant's rental payments to pay the mortgage, I very much doubt the tenant is paying the mortgage from their bank account.

The problem is that by the looks of it there is not equity to protect by continuing, unless Property three has equity worth protecting.

In order to continue and protect the properties the total rental payments need to be at least 25% more than the total mortgage payments.

Even if property three sells and clears the mortgage they are still left with 2 rentals, neither of which are turning a profit and both have no or negative equity....I also wonder if the income tax is being paid to HMRC as they cannot afford the mortgage on the third property.

Time to dump the lot and walk away - shame as the tenants will be out of their homes and the Ex will pick up the tab on property one - wonder if they know whats coming?

fatbelly

foxy-stoat wrote: »

The problem is that by the looks of it there is not equity to protect by continuing, unless Property three has equity worth protecting.

The OP didn't make that clear but the impression is that there is no equity there either. In that case, might as well let the Official Receiver sort the mess out.