Debt from negative equity shortfall when house was repossessed

farmerlamb12

Hi, we have nearly £40grand of negative equity shortfall from the sale of our property when it was repossessed (due to redundancy). We have no assets, rent privately and have 3 kids. 

We have been advised that Sequestration is our best option. Is this type of debt viewed differently to the likes of credit cards/loans etc? We are terrified about not being able to maintain direct debit bill payments etc or our bank account being stopped. (It’s a basic account). 

fatbelly

You are presumably in Scotland and someone is now writing to you about this matter.

Yes this type of debt is viewed differently.

The reason is that the debt is often very large and the person(s) involved will not be property owners now, was struggling to even make priority payments, and will be considering bankruptcy, where the creditor gets nothing.

Hence there are a range of strategies that might be successful and I am surprised that your adviser was so narrow in their options.

I once settled one for 3p in the £.

Here is the Scottish version of the National Debtline guidance

https://nationaldebtline.org/get-information/guides/mortgage-shortfalls-s/