considering voluntary reposession

[brent100]

Hi everyone

We are on the verge of declaring ourselves bankrupt as our business ahs unfortunatlety failed and we owe the banks money through the personal guarantees on the busienss loans.
The banks are chasing us. We also re-mortgaged our home to help finance the busieness so our repayments are very high. There is no equity in the house. The banks are threatening putting charging orders on the house - which would seem pointless due to lack of equity.

We seem to have only 1 option - bankruptcy and start again.

One issue remaining is our house.

We can ove out and go into rented - we have already seen a suitable house that would more than half our outgoings so are seriously contemplating moving into this rented property, then declaring bankruptcy and just letting the bank reposses the house.

Is a voluntary reposession better or can we "hand the property back to teh lender"

Whats the difference - and I assume any shortfall would just fall into our bankruptcy estate.

Drastic - I know, but we just want a line drawing under it all, dust ourselves down and start again.

Any help, advice etc,.... would be appreciated.

Thanks

[Bona]

I suggest you contact a insovancy practioner or Debt advice before you do anything or go to the CAB they can help you get the best deal even in banckruptcy

[Kai-Boshed]

From what I know about voluntary repossession - I believe you risk being subject to more shortfall on the basis that in this market lenders are accepting very silly offers. For instance a clients property, valued at £260 with no equity, was advised by the estate agent to sell for £235 for a quick sale (in this market) however the lender insisted the house was marketed fromt he start at £190k. The difference here is £45k so besides the owner being subject from the unavoidable mortgage shortfall of £35k, they are now left owing £70k - this is just one example. If for instance you stayed in the property until the "bitter end" you would give yourself more chance to find a buyer - a buyer which ultimately will be buying a repossessed property off the lender, not yourself. But what you gain to some extent is less of a mortgage shortfall. For instance if you have a sale agreed on the property for £235k, it would be illegal for the banks to sell it to someone else for £190k - because there are laws surrounding the sale of repossessed property which means a lender has a duty to sell the property at a fair price.


You might want to read this article:
Voluntary House Repossession

[brent100]

Thanks for your reply Kai - Bosh. The value of the shortfall is immaterial I think as any shortfall would fall as part of our bankrupt estate - whether it is £10k or £50k would just mean we would go bankrupt for more money than we will have to now.
This is how I understand it anyway.

Cheers

[cjhmace]

Dear Brent100

I just wondered how you were getting on with this and what your experiences had been since your last post?

I am also considering - as a last resort I might add - voluntary repossession and then bankruptcy. I have been in a debt management plan now for a year and a half but during this time my relationship with my partner has broken down. Our house has now been on the market for 10months but with very little interest due to the current state of the housing market. We have now dropped the house price to the lowest that we possibly can to be able to pay the mortgage off and cover the solicitors fees but have still had no joy. We are going to hold on for another 2 months and pray for a buyer but will then need to take drastic action. The situation with my ex has turned very difficult and we can't just sit out the crisis on the housing market. However given my current debts if we "hand back the keys" and then there is a shortfall I just can't manage this on top and would consider my only option to be bankruptcy. As i said this is a last resort but we have done all we can to try and sell the house and renting it out or sitting it out is just not an option.

Would be interested to hear how you were getting on and anyone else's experiences of similar.

[cat100]

Hi I'm in a similar situation although I'm further down the road as I'm battling against eviction.I've thought about vol repo ,hence other thread vol repo or eviction? on forum.All I can gather is if you vol repo, then LA won't look at offering housing.I don't know if that is the same if you ave kids under 16 yrs, as I though that LA would be legally responsible for the care of the children.
Also does anybody know if anybody took their lender to court for under selling their house, especially in the 90's?

[Ell-enn]

Cat - I remember seeing some case law whereby a debtor took their lender to court for not protecting their interests when underselling their house after repossession (or something like that). I'll try and find it for you.

[brent100]

Hi
sorry i've not responed quickly but i've had lots to attend to.
We have decided to stay and try to keep our house as we understand the local authority may not offer housing as we have "made ourselves homeless". We cannot afford to take this risk as we have children. We are still seriously looking at bankruptcy though as we should keep our house as we have no equity and we are led to believe that the OR would not force us to sell pour house due to lack of equity and children inviolved.

cheers
Brent

[Rachie1973]

Originally Posted by Ell-enn

Cat - I remember seeing some case law whereby a debtor took their lender to court for not protecting their interests when underselling their house after repossession (or something like that). I'll try and find it for you.

Hi Ell!

Thats happened to us now, following the repossession in May KC have finally sold the house.

In March when we put it on the market it was valued at £270K. We put it on for £250K. We then dropped it to £230k to try and gain a quick sale which didnt happen since it was repo'd on May 7th. We had a mortgage of about £210k

KMC put it on with a different agent and cancelled ours, at £199K and finally sold it ( I don't know how much for). This leaves us with a £10k mortgage shortfall and of course all the equity was wiped out, which I kinda expected anyway.

Would love to see any case history you can find!

Rachie xx

[OLIVE.FAMILY]

Hi guys, Here is a website and you can check house prices and what they are being sold for. Rach I am not sure how up to date it is but you could find out then how much they sold your house for
House Price Spy - Free UK house prices and statistics

olives xx

[Ell-enn]

Right, I'm on it - I'll do some digging around for the case and I know there are protocols which lenders are supposed to adhere to when selling after repossession in order to protect your interests.

Ell-enn

[TheChancellor]

Originally Posted by brent100

Hi
sorry i've not responed quickly but i've had lots to attend to.
We have decided to stay and try to keep our house as we understand the local authority may not offer housing as we have "made ourselves homeless". We cannot afford to take this risk as we have children. We are still seriously looking at bankruptcy though as we should keep our house as we have no equity and we are led to believe that the OR would not force us to sell pour house due to lack of equity and children inviolved.

cheers
Brent

Hope it works out for you - I would try and keep the house at all costs (having been similar to you in the early '90's when I just walked.)

You end up paying a fortune in rent with nothing to show (100% negative equity as I call it) and have to bow to a landlord.

If all they do is stick charges on your property then the debts are "done" and you wont need to look at them until you sell the house.Prices will go back up after the next 18 months or so once the banks get their ar**s into gear.The buyers are there but they cant get a mortgage.

Also check out an IVA as I think your house is excluded from the deal.

[Rachie1973]

Ell. My shining star as usual ty x

[gizmo111]

Originally Posted by brent100

Hi
sorry i've not responed quickly but i've had lots to attend to.
We have decided to stay and try to keep our house as we understand the local authority may not offer housing as we have "made ourselves homeless". We cannot afford to take this risk as we have children. We are still seriously looking at bankruptcy though as we should keep our house as we have no equity and we are led to believe that the OR would not force us to sell pour house due to lack of equity and children inviolved.

cheers
Brent

Have a read here Insolvency/Dealing with debt
The OR would only be interested in the equity in your property, not your children. If you have no equity it is likely you could buy your beneficial interest for as little as £1.
What debts do you have?
Whose name are they in?
The LA may consider you intentially homeless, but that doesn't stop you renting privately, if you are paying out large amounts on housign then it is worth comparing rents v your current housing costs.

[Rachie1973]

Originally Posted by brent100

Hi
sorry i've not responed quickly but i've had lots to attend to.
We have decided to stay and try to keep our house as we understand the local authority may not offer housing as we have "made ourselves homeless". We cannot afford to take this risk as we have children. We are still seriously looking at bankruptcy though as we should keep our house as we have no equity and we are led to believe that the OR would not force us to sell pour house due to lack of equity and children inviolved.

cheers
Brent

Dont be too sure on that Brent.

We were in exactly the same position, company went under etc and we couldn't afford mortgage, I appealed to the courts til the last possible moment and they still repossessed, despite having 5 kids and 2 with learning/behavioural problems.

We ended up in a B & B for a while, then managed to get a private rental which incidentally turned out to be a blessing because we qualify for housing benefit now.

We were lucky in that the business was in my husbands name alone so now he will declare bankruptcy to clear it all.

Its not an easy solution though, so don't be lulled into thinking it can be.