House May Be Repossessed If Something Isn't Done Soon

Remy_LeBeau

Hi,

Looks like we're going to lose the house; over the past 15 years or so (I'm 52) I've accrued debts of ~£600,000, by living off credit. ~£170,000 of this was paid off about 4 years ago when I sold my flat (which was previously a Buy to Let investment) for ~£180,000, leaving £420,000 to pay off. I haven't had much income over the past 4 years; failing IFA business was sold for ~£15,000 (I've been self employed since 1986), and I tried a few different jobs but they didn't work out, and then bought a new franchise business about 2 years ago, but it's not going nearly as well as hoped.

The credit crunch has affected me quite severely; previously I was able to continuously balance transfer, without issue, but cards have started refusing me, despite a perfect credit record and homeowner of a £470,000 property (debts now stand at ~£400,000, £280,000 of that is the mortgage (I've remortgaged several times since we moved in) and a further £120,000 is entirely credit card debt; no unsecured/secured loans/hire purchase/catalogues/store cards etc.

My son has proposed I sell him the house for ~£280,000 (the value of the mortgage) and then declare bankrupty; writing off the outstanding £120,000. Would this be possible? We may be able to obtain 2 valuations from different estate agents in this price range, what risk would the Estate Agents be taking on if they gave such a valuation on a property that was valued on Friday for £470,000 by a different Estate Agent? - could I just argue it was a quick sale... clutching at straws a little perhaps - if I declared bankrupty, would they investigate a transaction like this and decide I'd effectively gifted a good part of the value of the house?

My current income is less than £8,000 a year, or ~£28,000 between me and my partner, although she has no debts whatsoever. We live with 2 children, one aged under 18, and the other is a Student, our older 2 children have moved out.
We don't have anything in savings/pension etc, it has all gone on paying off debts.
I wasn't a debt counsellor when I was an IFA by the way, I was selling investment products, life insurance, health insurance, that sort of thing.

If we sell up for the proper value, pay everything off and rent, would my daughter who's under 16 be eligible for Council Housing, or is she too young?

Currently, mortgage repayments are £3,500 a month. I have been paying it off at this level by shifting the debt onto new credit cards. A further £3,000 a month is made in minimum repayments to other cards. I know this sounds unbelievable, but I used to own a Independent Financial Advisor firm and this reflects extremely positively on all matters financial; until recently I've had no trouble applying regularly for new credit cards and being given credit limits of >£10,000 on pretty much every new card I applied for (spanning over several years).

Another idea I've had is to sell the house, and use my family's dual-citizenship with Canada to run away from the creditors, would this work in reality?

Sorry for the long post, I had an existing thread over on the Mortgage's Board, but it was in the wrong place to get the right advice really.
Link here: http://forums.moneysavingexpert.com/showthread.html?t=880825
I have asked both Board Guides there to move the discussion to here, but noticed neither has been online since 19/04/08 so my PM might not get seen for awhile.

May as well come clean about something too; this is actually my Father's son writing this, and it's me that would be in a position to purchase the house. Any advice will be passed on - we're dealing with this together.
Daft thing is, I earn in excess of £110,000 a year; ~£70,000 net. I rent, and could afford to purchase the house and rent it back to my family, or come to some arrangement. I do quite like the idea of purchasing it for much less than market value, allowing him to write off a large part of his debts. I would be able to support my family long-term, yet at the expense of my own financial future; I currently get a return of >5.5% per month net by re-investing into my business; ~90% annual net return (albeit I have already forecasted this RoI %age will have diminishing returns and not scale at that level beyond another 2 years at most). Despite this, I would also have to take out the mortgage in partnership with my sister; I'm self-employed and have not been in business long enough that I'd be granted even a £280,000 mortgage, let alone £470,000 (else I would already have taken out substantial amounts of credit to re-invest!).

I know this is a lot to "come clean" about, perhaps we could keep the discussion primarily to my Father's circumstances and how best he could come out of them, and whether any of my above proposed ideas are workable? - I know the figures I'm giving for my earnings, etc, are rather incredulous, may sound unsustainable, etc. TBH, I'm actually giving conservative estimates; my income has grown exponentially since April '07. I'm wondering whether I should remove this part of the post; discussion of it won't be particularly helpful to the situation.

Thanks very much for your help

stapeley

I think it is sure thing a investigation would discover a fraud so stear clear of this idea .

Remy_LeBeau

stapeley wrote: »

I think it is sure thing a investigation would discover a fraud so stear clear of this idea .

Hmm, I should probably get some professional advice on how the whole investigatory section of the procedure works, but surely alot of people here have been through it (maybe I should write a smaller more concise question on the bankruptcy board...).

How about the idea of fleeing the country, is it an option? Half my family live in Canada already.

tallyhoh

You could not sell the house to your son then declare bankruptcy, everyone thinks of that one to start with. The official reciever will take a very dim view of it. Check out the bankruptcy board which will give you a rough idea.

Running away wont work either as it will affect your credit wherever you go.

I am a bit confused regarding the question on your daughter & housing? As she is under 16 I assume you will want her to remain with you as she is still classified as a child. She would not be able to get council housing, at least with no councils that I have ever heard of. She could possible be taken under the control of the local authority (taken into care) due to her age, but I am sure thats not what you want or actually meant.

I think a call to one of the debt charities listed should be your next step.

CLAPTON

Its very confusing to have the debts all lumped into one... perhaps you could itemise each debt

Is the house jointly owed ?

Are the debts all your fathers or are some joint ?

mummytofour

How about selling the house, paying off the mortgage that leaves about 190k tops in cash. The rest im not sure about... you could move to CA you could buy something here, rent or many things I think getting shot of the house and that 3k per month payment should be top of the list. then offer full and final settlements to the creditors?
To the son Im sorry but you cant buy the house for £280 I just cant see its an option at a time when your dad needs all the cash selling to u at a reduced rate really cant be done and in the long run one way or another could damage your father son relationship.

Little_Miss_Winner

and homeowner of a £470,000 property (debts now stand at ~£400,000, £280,000 of that is the mortgage (I've remortgaged several times since we moved in) and a further £120,000 is entirely credit card debt; no unsecured/secured loans/hire purchase/catalogues/store cards etc.

So if you have a house worth £470,000, and owe £280,00 (mortgage) WHY DONT YOU JUST SELL THE HOUSE????
Am i missing something here?

That would leave £190,000.

Pay the £120,000 credit cards off and use the £70k to put down on a smaller house.

I am not entirely sure, why the talk of bankruptsy, fleeing the country etc comes into it?????

Little_Miss_Winner

If we sell up for the proper value, pay everything off and rent, would my daughter who's under 16 be eligible for Council Housing, or is she too young?

She is too young.....do you mean for her not to live with you??

Not sure what you mean by the above.... Or did you mean for her to rent you a new house??

southernscouser

I'm pretty certain what is being proposed is illegal.

If you are near to losing your home you may well have charging orders on it anyway.

The bankruptcy board might be a better place for intial advice but I'd definately speak to someone at the CAB.

Remy_LeBeau

mummytofour wrote:

could damage your father son relationship.

I didn't explain properly, the intent was I would be the deed holder, but would still live elsewhere, and my family would continue to live in the house for the foreseeable future; I'd just be purchasing it as an investment, with the gigantic discount as the incentive, basically. Just asked one of my friend's, they said anything below £440,000 would be ridiculously cheap in this street/area, and a 5% discount is the norm for a quick sale. He's going to think about ways we could reduce the value without damaging it though, supposedly filling it with junk a la "grime time" and making it smell putrid is a good way of knocking large sums of the value without destroying the property, but we'd have to leave it on the market for some time and turn down offers...

potogold wrote: »

I am not entirely sure, why the talk of bankruptsy, fleeing the country etc comes into it?????

Well, because I'm a rather immoral person, and would rather siphon off some of the equity, and write off debts, than pay them off in full, and leave my family without a home. Sorry if I was being vague before (£70,000 doesn't buy much, so they'd have to take out a new mortgage and pay it off, rather than simply continue to live here, with me paying off the mortgage, albeit a ridiculously cheap one).

potogold wrote: »

She is too young.....do you mean for her not to live with you??

Not sure what you mean by the above.... Or did you mean for her to rent you a new house??

You're quite right, this is very much a "benefits blagger" type idea and completely unnecessary, ignore it (my sister quite liked the idea of being given a flat; a few of my friends have done this, but they're a couple of years older and had been kicked out by their parents).

Remy_LeBeau

CLAPTON wrote: »

Its very confusing to have the debts all lumped into one... perhaps you could itemise each debt

Is the house jointly owed ?

Are the debts all your fathers or are some joint ?

Sorry, I don't know how much is owed to who, I only became aware of the situation in the last few days. The house is in my Dad's name, as are all the debts. I'll have more details as time passes - I need more details when we go to an accountant anyway, I know my Dad has highly detailed accounts going back years; he itemizes everything on shopping receipts, for instance, and then categorizes the spending (Quicken/Quickbooks not sure which never looked that closely).