Bankruptcy unable to sell proeprty

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%).



  • sourcrates
    sourcrates Forumite, Ambassador Posts: 27,673
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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.
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  • BellaBlondykeTheThird
    BellaBlondykeTheThird Forumite Posts: 10
    Photogenic First Post
    Great advice above and most importantly don't get stressed about it all. You may even feel relieved and less stressed.
  • fatbelly
    fatbelly Forumite Posts: 19,213
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    edited 13 September at 7:34PM
    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
  • ManyWays
    ManyWays Forumite Posts: 138
    Third Anniversary 100 Posts Name Dropper
    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
    jlollas Forumite Posts: 2
    First Post
    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
    silvercar Forumite, Ambassador Posts: 45,941
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    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. 
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