What to do if it goes belly up?

Gorgeous_George

What to do?

If you have a house that you can afford and that meets your long term needs, you have nothing to worry about (except what to talk about over dinner).

If you have huge debts, you can be declared bankrupt and start again. An option not to be taken lightly but the sooner you start, the sooner you can get on with the rest of your life.

If your home does not meet your long term needs i.e., you want to move, selling cheap is not a major problem as you should be able to buy cheap. You just need 15% deposit. If you cannot save the deposit, you may as well get the huge debts and declare yourself bankrupt and start again.

GG

silvercar

Except that secured loans aren't included in your bankruptcy, so you still need to deal with your house, even if you go bankrupt.

Gorgeous_George

Would the loan still be 'secured' if the property was repossessed?

GG

silvercar

at sale following repossession, the mortgage + arrears get repaid from proceeds. If there is an amount still owing then whether it is included in the bankruptcy is a very grey area. It all depends on when the property was sold and when the bankruptcy took place. The general principle is that negative equity at the time of bankruptcy is not really secure and so should be included; early redemption charges were not incured prior to repossession, so its not always possible to include them in bankruptcy.

If someone doesn't get repossessed soon after bankruptcy it becomes a real grey area; remember a lot of people manage to keep their home after bankruptcy. Renting becomes difficult after bankruptcy as does council housing so some like to hold onto their home. Bankruptcy removes unsecured debts so making the mortgage more affordable. The reverse is also true: a lot or people who are repossessed or hand the keys back are not made bankrupt.