Banruptcy - cnfused re: secured & unsecured debt??

Danni1710

Hi, I have a mortgage at £700 a month, a secured loan at £300 a month together with unsecured debt of £17800k. My house is on the market and was valued at 124995 3 months ago but due to lack of interest, the state of the market and similar house prices iv had to drop it to £119,500. Still no interest. Im behind with the mortgage and loan and have defaulted on most other credit debts. I currently earn about £1500/month but in August I am going on maternity leave and will only earn £400ish a month! My OH is self employed and his wage varies but after deduction of tax and NI, 800/month is a realistic figure. Ipoke with NDL yesterday and they have advised that I consider bankruptcy. My main query is what to do about the house? I have to move, there is noalternative - we don't have enough room for another child and renting will save us about £400 a month!! The longer we stay the worse the problem gets. If I declare bankruptcy, can I just hand over the keys and leave them to sell the house? What about the shortfall? Obviously Im not going to enter into this lightly. The house is the main issue and if I can include this in the BR then I can't see any other alternative. If I can't then im at a loss at how to proceed. Any advice happily received.

Richard_S

Hi Danni,

Any shortfall from the sale of the house will be included in your bankruptcy regardless of whether you declare bankruptcy before or after the house is ultimately sold, and any shortfall realised.

If you're sure that bankruptcy is inevitable it would be a good idea to stop paying all credit cards, loans and the mortgage. That will give you chance to save for the bankruptcy fees and a deposit on a rented property.

Regards

Richard

wba31

Richard is right... the way i would advise to do it is as follows

- stop paying mortgage and secured loan, the house cannot be repossessed until there are 6 months arrears
- stop paying your creditors
- use the spare money you have now to save for rent, moving costs and bankruptcy fees
- move into a rented place, if you want it in joint names, but you go bankrupt first, the landlord will see it on your credit file
- once moved in, just hand the keys back to the mortgage company of your old house...
- put new utility bills in partner's name
- include all details of mortgage and secured loan on BR forms - and any shortfall will be included...

good luck with all this!

Danni1710

Thanks Richard/ WBA31,

Its nice to know that so many other people have been on this site and I thank you all for sharing your experiences.

I feel really dishonest/ immorral not paying anything and think I just needed reassurance from people who have been in this situation before going ahead and paying nothing at all! Do you suggest I offer token payments for now or not?

Iv seen the letter for stoping the constant phonecalls and that is my next task.

Another qestion that has sprung to mind about saving my money for the bankruptcy fee/ deposit on rented accommodation is that I kinda feel as though I am squirriling away, will the OR 'frown' on this - I have been kinda worrying about him imporing a BRO of some sort - is this likely??

Gonna call CCCS for a second opinion I think, just to rest my mind but deep down I think I know this is my best option and from the threads of past experiences I have read, it isn't as daunting/ destroying as I have built up in my head!

Richard_S

Hi Danni,

I'm not proud of having been declared bankrupt, but neither I am in the least ashamed, embarrassed or feel any guilt. I'm completely indifferent; it's just one of those things that happens. You don't suppose for a minute that banks feel bad about kicking families out of repossessed houses, or debt companies have sleepless nights because of the unforgivable way they harrass people. It's just a part of living and working in a capitalist democracy.

It would be a complete waste of money to offer token payments, and I really wouldn't bother. Neither will the O.R have any problem with you ensuring that you have sufficient cash reserves to tide you through your bankruptcy; especially if you're "economic with the actuality".;)

Once you're declared bankrupt there's no such thing as credit to smooth out life's little bumps, so you're going to need that cash buffer.

Definitely the thought of, and the time prior to, is worse than actually getting the deed done, and realising that you can start to put your life back together.

Richard

Dez-Titute

Is your OH on the mortgage or secured loan.If so it could impact on his situation going forward.

So_Sad_Angel

Hi Danni.

Firstly lots of <<HUGS>> sounds like you need it right now & congrats on the baby...the welfare of your familiy is the most important thing.

You have to take whichever steps necessary to protect that. I agree with Richard here & don`t feel bad...in fact you are facing up to the situation & that is to be commended!!

You need to take a `businesslike` approach taking the necessary steps with advice & if you can detach yourself from some of the emotional side ie- feeling bad about not paying then you must do this...this is what CCCS & NDL will recommend anyway.

If you are worried that this looks like `squirrelling away` be assured that this is what the debt charities have recommended. Actually you are taking steps to sort your situation which is a very positive move.

I tend to waffle so I`ll go now but if you need a bigger property then look to rent now b4 repo. Someone may post a link to Scarlett`s thread that I`m sure will give you some pointers.

Angex

Danni1710

Hi des titute -everything is in my sole name, which is a god send in one way I suppose. At least we can use his name for renting etc which I am hoping will be make things easier.

The one last thing...and im sure that there will be more !! I was wondering if I ought to tell my creditors now about me filing for bankruptcy?? And when should I actually do this? My wage will drop significantly on 30th Sept ish and thought I should do it to coincide with that, gives me a couple of months to save up some cash. Can i complete the forms and arrange the date for later or should it all be done at once?

Thanks
D :eek:

Richard_S

Hi Danni,

I wouldn't bother telling your creditors about declaring bankruptcy, they either won't believ you or they'll put even more pressure on you to pay them something.

I would tend to go for declaring bankruptcy sooner rather than later, assuming that's what the Debt Charities have advised. There won't be time to get an IPA in place before your wages drop in September, and if you've stopped paying all your creditors you should be able to save some money quite quickly.

Regards

Richard

fiveyearplan

That's good news that everything is in your name (same as me, most things in my name) so that just one of you have to go BR. I agree with Richard, no point in telling your creditors. I didn't pay any of my creditors (except priority ones like council tax and utilities, car insurance etc) for 11 months before my bankruptcy, I did have to put up with the phone calls but I just stopped answering the landline and only answered the mobile to people I knew. I had over 200 missed calls from one creditor (Mercers!)- you'd think they'd get the message! So if you are planning Sept that gives you plenty of time before they can take any action against you.

Good luck and keep posting any questions you have.

Danni1710

Thanks guys, feeling more positive already, amazing what a bit of reassurance from others can do for you isn't it?! Opened my cashminer account today...first step made, next is to move my name of the joint account. PS, how nice are the ppl at co-op!! I think I could quite happily call the girl who opened my account again, just for a chat :0)