Bankruptcy unable to sell proeprty

jlollas

I have had my flat on the market for nearly a year. I’ve had 2 buyers drop out and my fixed term has now ended, I am unable to afford the mortgage as it will double. I have taken advice and believe bankruptcy may be the best option. The property is negative equity anyway so I’m not worried about keeping it. Does anybody have experience of this -whether to voluntarily surrender my property to the lender or just go straight for bankruptcy? I don’t know what’s best to do so I don’t get stung with the negative equity debt that will arise.. 
to make it more complicated the property has a loan from help to buy (20%).

thanks

sourcrates

You don`t need to go bankrupt, if you simply hand the keys back to the lender, they will begin the process of selling it.

Whatever the house sells for, will obviously reduce your debt, whatever is left is known as a mortgage shortfall debt.

Now the above process can take quite some time, and it will be at least 12 months after the house sale is completed before any collection activity will begin.

The lender will likely sell the debt to a specialist company, who will then likely try to contact you, the good news is these debts tend to be quite large amounts of money, and they know people who have recently being repossessed don`t have tons of readily available cash to hand.

If you can afford to pay something, they will accept that, if you can`t, and you can back it up with a copy of your budget, they will usually suspend collection activity indefinitely without much fuss, and if your situation stays that way, you will find that`s the last you will hear from them.

BellaBlondykeTheThird

Great advice above and most importantly don't get stressed about it all. You may even feel relieved and less stressed.

fatbelly

If you are still living there, and considering handing back the keys, where will you live then?

Have you considered staying put and, if the mortgage is unaffordable, stopping paying?

It could take a year , maybe longer, before the repossession process completes.

I once met a guy in court at his repossession hearing who had been living in his car for a year after walking away from his mortgage.. I pointed out that he would get a 28-day order and then a warrant would follow. If he wanted to go back to his house in the meantime he was ok to do that

Shelter are very good on this sort of thing

https://england.shelter.org.uk/housing_advice/repossession/selling_your_home_to_avoid_repossession

ManyWays

Finding somewhere to move to should be your top priority. If that means a private tenancy, then you want to move before bankruptcy as that on your credit record will make it harder to get a tenancy. And if you need to save a deposit and moving costs you may need to stop paying the mortgage and/or other household bills to do this. Bankruptcy can wait until you have moved.

jlollas

Thanks for everyone’s advice 
I have moved out already and living with parents as can’t afford to pay bills etc. I don’t care about retaining the property especially as it is in significant negative equity anyway hence bankruptcy.. 

silvercar

The lender take their money first, then HTB get any left over, any after that gets returned to you.

If there isn't enough to repay the HTB then the government loses out on that money.

The HTB loan is a percentage of the price realised. So if you are in negative equity, HTB would only be entitled to the same percent of the final price and that is after the lender has taken all their costs, arrears, capital owed etc.