Credit Crunch and Housing Market... where to turn?

izools

So here it is.

I now have a situation I don't know how to move forward with

• My house is mortgaged and in £4,500 negative equity
• I am an undischarged bankrupt
• I do not have any savings or a high income (£15,000)
• Myself and my partner (co-owner of the house) are going our seperate ways
• The cheapest monthly repayment the bank will agree for the remaining mortgage balance (£134,500) is higher than any possible rental income if we let the house out

I need to move out and get my own place, be it a small flat or part of a house share. I have no intention to buy, just rent.

What should I do with our house?

So far the only conclusion I have come to is to leave the keys on the Bank's doorstep :undecided

UK007BullDog

That will not solve the problem as they will still chase you for the difference once the sell it at auction and get nearly nothing for it.

I suggest you both keep it as it is and rent it out. Maybe one of you stay in there and rent out the other room(s).

If you just walk away your situation might get even worse. Or sell it and the rest of the money beg and borrow from relatives to pay off the bank.

Dan_Collins_2

You can sell the property but you will have to come up with the difference and fees, so if you have any savings your ok.

Could you start your own house share?

izools

Yeah I know all of that unfortunately

• Family dont' help (wouldn't be bankrupt if they did)
• Rental value of the property is significantly less than the monthly mortgage payments
• I dont' have savings (am not allowed any as an undischarged bankrupt) to pay the difference between sale value and mortgage balance

I can't just 'keep it', as it's not just my property. Is a two bedroom property and already renting out the spare room, which we need to in order to break even on the monthly bills as it stands.

> What's the worst that can happen if I just "Walk Away"?

beecher

As has been stated, walking away means that you have to pay the difference between what they sell it for at auction, and what you owe - this is likely to be more than the difference if you sell it yourself. You need professional advice on what to do but you need to get the property on the market ASAP I think.

silvercar

Some of this advice, although true in general, is wrong.

You need to consider caregully. If the property was your alone:

As an undischarged bankrupt your negative equity (presuming that it existed at the time of your bankruptcy) is just one more debt commitment that you cannot meet. If you wanted to walk away from the property the negative equity would be included in your bankruptcy ie gone forever.

As you are a co-owner, the situation is more difficult and you should consult with your OR for advice. The OR will hold your share of the beneficial interest in the property, as this is negligible your partner will have the opportunity to buy it for a couple of hundred. If your partner doesn't want it, then it would revert to you in 3 (?) years time if at that time there is no value in it.

Really the problem belongs to your partner. If you both walk away from it, the lender would chase your partner for all the shortfall (jointly liable for all the debt and your debt would be include in your bankruptcy, so your partner is chased for all.) You wouldn't be allowed (by the OR) to favour that debt over any other as all your creditors are entitled to proportional shares of any spare money you have.

If your partner was thinking of bankruptcy then all the debt would be written off in bankruptcy. If your partner would take on the debt then you can walk away.

I would say that your partner needs advice.

You on the other hand, an an undischarged bankrupt, could walk away and let the OR, the lender and your partner fight it out between them. Not a very nice thing to do, but a solution.

izools

Thank you for your advice!

I presumed the situation would be like that.

I mean, it's not like I don't want to meet my obligations and pay off the mortgage lender, or make up the shortfall, or let the hosue out.

It's just that it's feducially inpossible; and tbh considering my ex has a £18,500 CCJ sat on their credit file and three or four defaults, I doubt a bankruptsy order on top of that is going to make a whole lot of difference!

And with my ex being financially tied to me, any credit searches done on 'em isn't gonna pass whilst my bankruptsy order is still showing anyway.

So really it is a matter of both of us being bankrupt and letting the bank go sing for it.

Not the solution I want, but certainly the only choice I have.

Thanks for all your advice

Conrad

One of my brothers threw the keys in and his lender caught up 10 years later and presented a bill for £50,000, but they settled on just £2500

Conrad

Some clients recently went bankcrupt under the new rules and it was the best thing they ever did - really was a simple as walking away from a wall of pain, with no dire consequences and they even kept thier Barclays Woolwich Bank account running, and no one repossessed anything.

You hear a lot of 'old wives tales' on forums like this about how bankcruptcy is ruinous, but that simply is not the real world experience I've come accross.

gogsboy

Conrad wrote: »

Some clients recently went bankcrupt under the new rules and it was the best thing they ever did - really was a simple as walking away from a wall of pain, with no dire consequences and they even kept thier Barclays Woolwich Bank account running, and no one repossessed anything.

You hear a lot of 'old wives tales' on forums like this about how bankcruptcy is ruinous, but that simply is not the real world experience I've come accross.

Thats a major player behind the 'credit crunch', the new laws was a ticket for free loaders!

Plenty filipinos, poles and the like along with brits took out various cards when they were chucking them at you, ran them up and them laughed all the way to the bank.....that's the reallity of it!

Pobby

I know of others that have walked away. I think one owed the lender £100k and ended up paying £4k. Another guy just chucks the letters in the bin.