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Elderly parents facing bankruptcy
Shellbob83
Posts: 10 Forumite
Hi
I have been supporting my parents with their debt problems for nearly 2 years now. They have been with Christians Against Poverty on one of their repayment plans which has worked well and reduced their debt from £28,000 to just over £11,000. The sticking problem however is the fact that they also have an outstanding mortgage off £82,000 which they didn’t include in their plan because they hoped to be able to sell the property. This however has not been possible.
The house has been on the market with several different estate agents for 2 years at the low price of £90,000. The house is in a bad way and needs quite a lot of work. Anyway because of the state of the house and the impact this was having on their health we decided to move them in to housing association flat and have given the keys back to the mortgage company. We then planned to file for bankruptcy as with the best will in the world two pensioners are not going to be able to pay of £93,000 in their remaining lifetime!
I thought we could file for bankruptcy now we have given the keys back however CAP are saying we need to wait until the property is sold in case their is equity which might clear all the debts. Is this correct? I am concerned that the mortgage company could drag their heals and not sell it for months if not years. Plus I highly doubt their is any equity because surely it would have sold by now if there was?
From what’s I’ve read once the bankruptcy goes through, even if the property isn’t sold, they won’t be liable for any negative equity.
So should we just go it alone, file for bankruptcy and go against CAPs advice?
I am looking for the quickest solution for them now as they have been trying their hardest to solve this debt problem for so long now and it really is starting to get them down. And bankruptcy, although scary, at their ages probably won’t have such a massive effect surely? Ie they won’t be taking out loans or applying for mortgages etc
Sorry for the long winded explanation but I felt some background may help.
Any advice anyone could offer would be extremely appreciated as they are looking to me for support!
I have been supporting my parents with their debt problems for nearly 2 years now. They have been with Christians Against Poverty on one of their repayment plans which has worked well and reduced their debt from £28,000 to just over £11,000. The sticking problem however is the fact that they also have an outstanding mortgage off £82,000 which they didn’t include in their plan because they hoped to be able to sell the property. This however has not been possible.
The house has been on the market with several different estate agents for 2 years at the low price of £90,000. The house is in a bad way and needs quite a lot of work. Anyway because of the state of the house and the impact this was having on their health we decided to move them in to housing association flat and have given the keys back to the mortgage company. We then planned to file for bankruptcy as with the best will in the world two pensioners are not going to be able to pay of £93,000 in their remaining lifetime!
I thought we could file for bankruptcy now we have given the keys back however CAP are saying we need to wait until the property is sold in case their is equity which might clear all the debts. Is this correct? I am concerned that the mortgage company could drag their heals and not sell it for months if not years. Plus I highly doubt their is any equity because surely it would have sold by now if there was?
From what’s I’ve read once the bankruptcy goes through, even if the property isn’t sold, they won’t be liable for any negative equity.
So should we just go it alone, file for bankruptcy and go against CAPs advice?
I am looking for the quickest solution for them now as they have been trying their hardest to solve this debt problem for so long now and it really is starting to get them down. And bankruptcy, although scary, at their ages probably won’t have such a massive effect surely? Ie they won’t be taking out loans or applying for mortgages etc
Sorry for the long winded explanation but I felt some background may help.
Any advice anyone could offer would be extremely appreciated as they are looking to me for support!
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Comments
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I am not an expert or even much knowledge but is filing bankruptcy best route of action for pensioners as it will blow their credit which when my Grandad had to go into a home it was subject to credit check, so what happens if they need to go into a home suddenly etc..0
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I am not sure, no one has ever mentioned anything about that. To be fair though their credit rating is pretty shot anyway because of the situation they are in.0
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Shellbob, I work with several nursing homes and none do credit checks. Such a suggestion is nonsense, they're not offering credit!
If the property is not sold prior to BR then any proceeds will go to the receiver once it is. The mortgage company are not going to drag their heels because they want to release their funds sooner rather than later. If the sale proceeds do not cover the mortgage then the shortfall becomes a part of the BR, hence why CAP suggest it should happen beforehand.
Voice your concerns to CAP, but keep in mind that they do know what they are doing and their advice is generally very reliable.0 -
If the sale proceeds do not cover the mortgage then the shortfall becomes a part of the BR, hence why CAP suggest it should happen beforehand.
The shortfall becomes part of the bankruptcy, whether the sale pre-dates the bankruptcy or not. Provided of course that a parent doesn't sign anything after bankruptcy accepting liability for the debt.
Once the repossession has taken place you are in the hands of the lenders, they dictate the marketing price, how actively they sell etc There is always the risk that they are happy to wait for a sale in the hope that prices increase and the debt is covered.
That shouldn't really matter to your parents.The house has been on the market with several different estate agents for 2 years at the low price of £90,000. The house is in a bad way and needs quite a lot of work.
Whatever the condition, there will be a market price. I'm surprised estate agents haven't been pushing for a price reduction to secure a sale. Up to the lender now, who may well be holding out to get sufficient to clear the mortgage.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Thank you both answers are helpful and reassuring to know that if we decide to file for bankruptcy the debt of the mortgage will be included.
Just need to pluck up the courage to actually do it!0
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