Property and going bankrupt?

btl_dohnut

Hi All,

Im in a desperate situation and dont know how to get out of it without going bankrupt. It is not a normal scenario, but hopefully you can help.

I bought nine buy to let properties between april - dec last year, mainly for a letting agent who was utilising them by putting tenants on a multilet basis at £65 per person per week. Sounds to good to be true, and yes your right after 2-3 months it was!!

Anyway, having gone away from getting these rents I was left to go down the traditional rent routes, 3 of the properties are left with £300 per month shortfalls after rent and only 1 is breaking even, others £100-£200 shortfalls. Leaving roughly £1800 per month to find.

I bought all these properties supposedly BMV (below market value) however with the current housing slump and credit crunch, I know all of them will be in negative equity, probably totalling more than £100k between them all.

First question:
1. Does the negative equity get included in BR?
2. Will I lose my home? Have about 20k equity in it, house in joint names and have 4year old son.
3. How long does BR last?
4. Will they still be able to chase me for debt after made BR?
5. iF i MAKE MONEY IN FUTURE WILL THEY HAVE A HOLD OVER ANY OF IT?
6. cAN i GET A MORTGAGE IN FUTURE?

Apologises for all quests, got myself in a bit of a pickle and dont know a way out!

I cant sustain this much longer, I havent yet defaulted on any payments, auctions will still leave me with the negative equity and have run out of money after using all sources!

Please help!

poorandindenial

Hi there

Your best bet is to speak to a debt management organisation like www.cccs.co.uk, they have a part of their website called debtremedy where you can see what your options are and they also can advise you on whether you would be eligible for BR (as you haven't missed any payments you may not be) and what options might be available to you.

I'll post a list of all the free debt help agencies in a sec. CLICK HERE for the list

Also check out the Bankruptcy board - the people on there are bankrupt, considering it or have been bankrupt and can share their experiences with you. It is the little board at the top of the main page for this one.

mystic_trev

I'm sorry but I really can't see how you can get out of this situation without going Bankrupt. How did you manage to buy such a large Porfolio with so little Capital? Did you buy these through Inside Track or their property arm?

So_Sad_Angel

btl_dohnut wrote: »

Hi All,

I bought all these properties supposedly BMV (below market value) however with the current housing slump and credit crunch, I know all of them will be in negative equity, probably totalling more than £100k between them all.

First question:
1. Does the negative equity get included in BR?

- yes if the debt is in your sole name & not a Company. Plus any other unsecured debt you may have.

2. Will I lose my home? Have about 20k equity in it, house in joint names and have 4year old son.

- Your OH can buy your interest in the property to protect this. In a falling market is this an accurate figure anyway?

3. How long does BR last?

- 12 months max (more likely early discharge as early as 6months )

4. Will they still be able to chase me for debt after made BR?

- No

5. iF i MAKE MONEY IN FUTURE WILL THEY HAVE A HOLD OVER ANY OF IT?

- - Not if you are discharged .

6. cAN i GET A MORTGAGE IN FUTURE? - Unlikely for a while.

Apologises for all quests, got myself in a bit of a pickle and dont know a way out!

I cant sustain this much longer, I havent yet defaulted on any payments, auctions will still leave me with the negative equity and have run out of money after using all sources!

Please help!

Hi BTL

I would strongly suggest that you copy & paste over to the bankrupcy board. There are experts in the property side of things & many of your questions can be fully covered.

Hope this helps....see you over there!

Angiexx

PS very well done for taking this first step to deal with your situation...the hardest part is admitting that there is a problem!

teabelly

Why did the agent switch from multi let to single let? If the rents were ok with multi let then get back to doing that, it is more work for them but they need to pull their fingers out. Did you check with other agents to see whether the rent they mentioned was achievable and realistic? How much are the agents charging you? The cheapest agent around is Discount Lettings who charge between 6 & 7.5%

If you have a shortfall then you have to find a way of paying it while you sell them. Contact your mortgage lenders and tell them what is happening and see if they will offer a payment holiday while you find a buyer. If you get the BTLs repossessed then you could lose your own house too. As it is jointly owned it does make it more difficult for them to force a sale.

Your best bet is to offload the whole lot to a BMV property sourcing company for the outstanding mortgage amount or as close to it as you can get. I hope none of them are new build flats as basically one beds are worth about 80k max in most cities outside London.

You need to get a realistic market valuation for all of them. As your house is in joint names it may be harder for it to be sold but a charge will still be put on it for the short fall on the BTL mortgages.

You will also have to pay early redemption charges on all the mortgages you took out so expect to add around another 3-5% of the outstanding mortgage amount to this.

This debt is all secured debt so bankruptcy won't wipe it out as I am pretty certain bankruptcy only discharges unsecured debt. Secured debt can be pursued for 12 years so for this long the original mortgage lenders can ask you for the short fall back.

So_Sad_Angel

[quote=teabelly;11526847
This debt is all secured debt so bankruptcy won't wipe it out as I am pretty certain bankruptcy only discharges unsecured debt. Secured debt can be pursued for 12 years so for this long the original mortgage lenders can ask you for the short fall back.[/quote]

Hi thanks Teabelly

Just wanted to clarify my answer to point 1 of OPs question -

The secured debt , while it is still secured to the property, is not included in BR unless it becomes unsecured by way of reposession/sale..then any shortfall caused by the negative equity position is included in the BR arrangement.

Thanks again... Ax

Ax

Conor_3

3. How long does BR last?

- 12 months max (more likely early discharge as early as 6months )

Is the wrong answer. It can last up to 15 years.

blind-as-a-bat_2

Conor wrote: »

Is the wrong answer. It can last up to 15 years.

No that is wrong BR itself last 12 months further extension of the restrictions can be up to 15 years if you get a BRO/U but BR itself only lasts 12 months max regardless

maxmycardagain

btl_dohnut wrote: »

First question:
1. Does the negative equity get included in BR? everything does

2. Will I lose my home? Have about 20k equity in it, house in joint names and have 4year old son. depends on many variables, joint aspects, partners,etc

3. How long does BR last? 1 year to automatic discharge, early discharge may be quicker

4. Will they still be able to chase me for debt after made BR? no

5. iF i MAKE MONEY IN FUTURE WILL THEY HAVE A HOLD OVER ANY OF IT? whilst BR (and for a total of 3 years) the OR could instigate that you pay an IPA - from any surplus you have from income over and beyond certain allowed living expenses

6. cAN i GET A MORTGAGE IN FUTURE? depends on your age, you will have a bad credit record for at least 6 years



Please help!

you must get proper advice, CCCS or CAB

did you trade as a sole trader or a ltd company?

silvercar

So much of this doesn't ring true...

Buying BMV may get around the fact you don't have deposits, but the rents would still have to cover the mortgages....

Buying 9 properties as a newbie in 6 months..........

Mulitletting to tenants with no HMOs.........

Buying them all BMV and now in just 6 months they are all in neg eq.....

Intending to auction knowing that the mortgages won't be cleared. Why do you think you will be allowed to do that?

Sorry this forum is for helping people not for wind-ups.

Broken_hearted

I don't know silvercar there are some people who create a big mess for themselves, the truth is often stranger than fiction. Someone saw them coming.