HMRC forcing house sale

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BigMoneyProblems
BigMoneyProblems Posts: 52 Forumite
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in Bankruptcy & living with it
Hi, hope some one can answer my question.
Would I get market value of house if made bankrupt ?

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  • silvercar
    silvercar Posts: 46,962 Ambassador
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    You wouldn't get anything, after the mortgage is cleared any equity left goes to the Official Receiver to put towards your debts.
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  • BigMoneyProblems
    BigMoneyProblems Posts: 52 Forumite
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    The house is worth around £500,000 the mortgage is £275.000 and the debts are £50.000 , so that's £325.000 wouldn't we get the £175,000 ?
  • JCS1
    JCS1 Posts: 5,288 Forumite
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    BigMoneyProblems wrote: »
    The house is worth around £500,000 the mortgage is £275.000 and the debts are £50.000 , so that's £325.000 wouldn't we get the £175,000 ?

    There would be official receiver fees, and with that much equity I would expect an Insolvency Practitioner to be appointed as Trustee so would be their fees too which can be substantial.

    Have you been made bankrupt yet? As from your figures you aren't insolvent.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    Why are you going bankrupt? Why not sell the house yourself and settle the debts (which is going to happen anyway with a shed load of fees on top if you let them manage the sale)


    p.s. what do you mean "we"?

    Is the house jointly owned? Presumably you aren't both going bankrupt?
  • BigMoneyProblems
    BigMoneyProblems Posts: 52 Forumite
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    we haven't been made bankrupt yet , they are threatening , the debt to HMRC is £40.000
  • BigMoneyProblems
    BigMoneyProblems Posts: 52 Forumite
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    Its my husbands debt. We have an elderly relative here who is poorly and has carers 2 times a day , we are trying to stay here for as long as we can , while the relative is still here (alive)
  • silvercar
    silvercar Posts: 46,962 Ambassador
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    With the figures you have posted, I would consider getting a second mortgage (secured loan) to pay off hmrc. Otherwise you will lose a lot of money in fees to the trustee in bankruptcy.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and 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.
  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    edited 5 September 2018 at 10:06PM
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    EDITED after subsequent posts.
    If they force you into a sale the fees will add substantially to the £40k compared to just selling it yourself or getting a larger mortgage (though I guess youve explored that option already?) have you?
    If you can show them you are actively selling they may give you a bit more time, but there's got to be a limit at which they will take action and you might find your money lost doubles when you take into account a lower price for the house due to a quick sale as well as the fees. They will just be concerned with getting enough to cover their debts not how much you are left with.
  • ACG
    ACG Posts: 23,727 Forumite
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    edited 6 September 2018 at 9:58AM
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    You are prepared to lose £175,000 (or part of) in order to keep a relative in the home for a little longer - not even for the rest of their life? That makes no sense, all you are doing is delaying the inevitable and losing a small fortune at the same time.

    You could do the sensible thing and buy a new place and at least be in control of your own destiny with no sleepless nights.

    But as has been suggested, you could also look at a secured loan, a remortgage with extra money or possibly even equity release depending on your ages.
    I am a Mortgage Adviser
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  • BigMoneyProblems
    BigMoneyProblems Posts: 52 Forumite
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    We are not prepared to lose that money , we don't know much about this and are looking into the best option . Of course we intend to keep our relative with us until end of life , which may not be too far away , she is very frail , her spine is twisted and it will be difficult to move her along with the stress for her she is sometimes in much pain . We are now looking into a second mortgage but arrears are causing a problem ,the arrears will be paid up this week. do you know any one who will lend us the money ? we have a poor credit score , not the worst but not good either.
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