Landlord bankruptcy

[Deleted User]

Ok, long one.
Myself, my partner, child and mother in law all lived together, 6 months ago she decided she needed her own space so she moved out into a property that she rents from agency. She kindly said we could stay here and just pay her the mortgage payment and the amount for bills every month. We are living here very cheaply and (silly of us i know) with no real formal agreement.
Now I know she had a DMP in place when she moved out but today she has received a B10 from the land registry. I know she has received a couple of court orders too in the last couple of weeks. So I'm guessing one of her debtors have forced her into bankruptcy.
Im now worried sick, what does this mean for us? Is she going to loose the house and in turn leave us with nowhere to live.
We are not financially in a position at the moment to find a deposit for another property.
I THINK (don't quote me on this) the amount that the debt could be for is around £6000. I think the rest was included in a DMP, im not too sure why the £6000 wasn't.

Grumpy_chap

Who is the "she" that moved out?  MiL?

As an immediate solution, can you raise funds to clear the £6k debt, plus whatever the recovery fees are added on top?

[Deleted User]

Grumpy_chap said:

Who is the "she" that moved out?  MiL?

As an immediate solution, can you raise funds to clear the £6k debt, plus whatever the recovery fees are added on top?

Yes sorry, mother in law moved out.
Im fairly sure she has no savings, im not sure how she would feel about borrowing off family. We have a small amount of savings but nearly enough to pay the £6000 x

Minkym00

How much equity is there in the property?

[Deleted User]

Minkym00 said:

How much equity is there in the property?

As far as I know quite a lot, mortgage was paid off and she remortgaged about 5 or 6 years ago for 25k

Minkym00

Sorry but there’s no sugar coating it. Your MIL has been very unwise letting her situation get as far as bankruptcy. Her property is now under the control of the Official Receiver, who is now your landlord. They’ll be in touch soon enough to start claiming your rental payments as your MIL will not be allowed to keep this money. She won’t be able to pay her mortgage either.

As she doesn’t live in the property, and you are not her dependents, then you won’t get the 3 years that the OR has to deal with a family home. An Insolvency Practitioner will be appointed straight away who will want to sell the property as soon as possible to realised the cash to pay her debts. All her debts will be paid from the proceeds of sale after her mortgage is paid off (not just the creditor that petitioned for her bankruptcy), plus the OR’s fees (£8k) plus the expenses of the IP (which will be substantial). Hopefully there will be some left over.

Your best bet now will be to start saving money for a deposit on a new place to live.

flipflopflo

If you can’t raise the money for deposits etc. to move if the OR gives you notice to quit then don’t move out and continue to pay your rent. Make them take you to court and when you get a court date go to the council as homeless. They may require you to wait until the bailiffs come but if you are packed and ready for them it won’t be too bad. You may be put in temporary accommodation to start with but they should help you. 

[Deleted User]

Minkym00 said:

Sorry but there’s no sugar coating it. Your MIL has been very unwise letting her situation get as far as bankruptcy. Her property is now under the control of the Official Receiver, who is now your landlord. They’ll be in touch soon enough to start claiming your rental payments as your MIL will not be allowed to keep this money. She won’t be able to pay her mortgage either.

As she doesn’t live in the property, and you are not her dependents, then you won’t get the 3 years that the OR has to deal with a family home. An Insolvency Practitioner will be appointed straight away who will want to sell the property as soon as possible to realised the cash to pay her debts. All her debts will be paid from the proceeds of sale after her mortgage is paid off (not just the creditor that petitioned for her bankruptcy), plus the OR’s fees (£8k) plus the expenses of the IP (which will be substantial). Hopefully there will be some left over.

Your best bet now will be to start saving money for a deposit on a new place to live.

Thanks for your honesty, this is hugely appreciated. Someone did try and serve a letter on her here a while back and I told them her new address. She mentioned it was a solicitor serving some kind of form on her. Im guessing its all linked, but she did say the her debt management company was dealing with it and it would be added to the DMP. It might seem a daft question but the debt is now passed this point now right? And the debt in question now cant be added to the DMP?

fatbelly

Minkym00 said:

As she doesn’t live in the property, and you are not her dependents, then you won’t get the 3 years that the OR has to deal with a family home. An Insolvency Practitioner will be appointed straight away who will want to sell the property as soon as possible to realised the cash to pay her debts. All her debts will be paid from the proceeds of sale after her mortgage is paid off (not just the creditor that petitioned for her bankruptcy), plus the OR’s fees (£8k) plus the expenses of the IP (which will be substantial). 

I've seen 30k quoted as a ballpark figure for fees & expenses. Would you say that's about right?

luvchocolate

The statement provided to me from my trustee dealing with property showed fees of over £24,000.
This obviously depends on time spent but fees are very substantial 

Minkym00

fatbelly said:

Minkym00 said:

As she doesn’t live in the property, and you are not her dependents, then you won’t get the 3 years that the OR has to deal with a family home. An Insolvency Practitioner will be appointed straight away who will want to sell the property as soon as possible to realised the cash to pay her debts. All her debts will be paid from the proceeds of sale after her mortgage is paid off (not just the creditor that petitioned for her bankruptcy), plus the OR’s fees (£8k) plus the expenses of the IP (which will be substantial). 

I've seen 30k quoted as a ballpark figure for fees & expenses. Would you say that's about right?

Yeah probably. I’ve seen much higher. 

If the OP (does what Flipflopflo suggests and) digs their heels then the costs associated with evicting them will eventually be paid out of the proceeds of sale. If MIL wants something left over to put down on a new property then I strongly suggest the OP does not put up a fight and does not have the IP take them to Court.