Can I declare bankrupcy after house repossession with negative equity?

KayCee1881

I have a mortgage with an ex. I moved out of the property 13 years ago and he paid the minimum interest payments on the mortgage whilst he lived there. He moved out several years ago (without letting me know) and then stopped the payments last year (also without telling me). I tried to get the property on the market several times over the years but having communication reciprocated has been difficult and so this never happened.

I now have a call of notice from the mortgage lender solicitors. I can't afford the payments so next step is the voluntary handing over of keys or repossession through the courts. The property is £50,000 in negative equity going by current market value.

What I am looking for is some information as to what I can do with the >£50,000 debt once the property has been handed back? Can I just declare bankruptcy? It seems like I can't get anything from citizens' advice till I am literally in the situation.

Also the ex now lives abroad so unlikely they will be able to recover the debt from him.

Grumpelstiltskin

What is your financial situation? Do you have any more debts? You do realize you could have a 3 year IPA if your finances allow?

A few more details would help us.

KayCee1881

Thanks for your reply.

No other debt apart from £3000 on a credit card that I pay off every month and which I hope to have paid off in 16 months when the interest free period runs out.

No other assets or savings.

KayCee1881

Also meant to add I am minimum wage so have around £200 spare a month after the bills and food expenses

KayCee1881

Also I am in Scotland. Not sure if I can edit previous posts rather than adding new ones every time I think of something else!

fatbelly

Well Scottish law has its own quirks but I would not rush into bankruptcy for 3k debt and a possible mortgage shortfall.

These debts are not pursued aggressively on either side of the border for the exact reason you describe. People in your situation have a large debt, no property and if you push them they are likely to go bankrupt and you get nothing.

I once settled one for, I think, 5p in the £

There is a useful chain of letters on the National Debtline site (make sure you choose Scotland) which starts with asking how the sum was calculated when someone writes to you with one. It often takes years to even get to that stage and if they are not on the ball they may forget that under Scottish Law a debt is extinguished after 5 years of no acknowledgement.

ManyWays

fatbelly said:

 if they are not on the ball they may forget that under Scottish Law a debt is extinguished after 5 years of no acknowledgement.

Does that apply to debts that have been secured, where there is a longer (12 year) limitations act period in England? 

I would suggest that anyone in England goes for bankruptcy to get a clean start as soon as possible in this sort of situation as I have seen people only chased after 10 or more years when their situation may be totally different and much better and the debt is off their credit record, so the creditor will not settle low.