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Bankruptcy Or No Bankruptcy? That Is The Question. Help And Advice Needed.


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Evening, a few years ago I used these forums to claim back by bank charges with great affect, I found the help and advice on here invaluable. Sadly I now need your help again, as I am now at crisis point, and need to know what my options are.

 

I have spent most of my adult life dealing with debt, i am now 29, and cant let it go on anymore, yes Ive made mistakes, but Ive also been let down my other people, people I thought I could trust.

 

I currently owe around 7k to around 6 creditors, ranging from personal loans, credit cards to a stupid payday loan, currently after advice from the CCCS, I an in the process of making token payments to all creditors, but I am still being harrassed. I have nothing against going bankrupt, I not proud, but also believe sometimes you have to take a full, to start again, and god I just want to start again.

 

Now Im sure your all saying well just go bankrupt, but I have a small issue. My flat...In Dec 2007 I was happy engaged to my fiance, and we decided to buy a house together, my debts were in control and so we went ahead. We brought a flat thought the government homebuy scheme, this ment we raised a mortgage for half the value(£110K) and the government gave us another mortgage for the other 110K, the government mortgage we didnt have to pay for the first 3 years. Well just six months later my fiance left me for another man. It detroyed me completely. I fell apart and so did my life. My ex lived in the flat until Feb 2009 , when myself and brother moved in as she said she couldnt afford to live here, well nor can I anymore, she has made it clear she doesnt want to move back, she doesnt want to buy my share of me(well I offered to sign the flat over to her for nothing, its lost 40K since we brought it, so there is no equity what so ever), basically because she knows the fact were in negative equity and she wants me to pay me share. If i had my way I would send the keys to the mortgage company and declare myself bankrupt, but what would happen to the flat, Im happy to loose it, I need to start again, but would the money I owe the mortgage company be included in the bankruptcy order?? also my only real asset is my car, a 1997 Celica worth less the 1K and is needed to get to and from work, would they take it from me??

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If i had my way I would send the keys to the mortgage company and declare myself bankrupt, but what would happen to the flat, Im happy to loose it, I need to start again,

 

but would the money I owe the mortgage company be included in the bankruptcy order??

 

also my only real asset is my car, a 1997 Celica worth less the 1K and is needed to get to and from work, would they take it from me??

 

Good afternoon SkinsJim

 

Try not to beat yourself up too much about this, these things happen and it is not against the law to be in debt, so let nobody judge you.

 

Just to reiterate, you are considering bankruptcy but are concerned about the property and your car.

 

Firstly (because it's more straightforward) the car, if the OR feels that the car is a valuable asset, then they can force a sale to pay towards your creditors, however, a car that's worth less than £1000 would probably not be seen in that light and you would normally be allowed to keep it, unless it was seen as an extravagance. ie a vehicle that returns only 15mpg might be seen as extravagant to someone who is subject to a BR order.

 

The house is another matter and a little more complex, once you declare yourself BR, the OR takes full control of all of your assets, including your half of the property. effectively they own the property and any other assets and can do with them as they see fit.

 

since the property is in negative equity it is unlikely that they would insist on selling the property in the first instance as this would not offer a return for the creditors and would in effect increase the amount of your indebtedness

 

They could offer your interest in the property to your former partner at a reduced rate, however since you would no longer be liable for the mortgage, your ex would effectively be paying full whack against the house, plus whatever value the OR places on your interest, so I would doubt that your ex would go for this

 

failing any sort of deal such as this, after three years the property has not realised enough equity as to make a sale a realistic option, you may be offered your interest in the property for as little as £1. basically, you'd be back where you are, with you owning half and your ex owning half of the property

 

If you decide to "walk away" from the property and let the mortgage provider retain possession, once the position has been clarified with both you and your former partner. They would sell the property on the open market and if this sale left a shortfall against the mortgage, both you and your ex would be jointly and separately liable.

 

A lot of lenders will normally attempt to get you to sign an agreement which would make you liable for the shortfall even if you go down the BR route, as long as you sign no such agreement, then such a shortfall could be included in the BR. if you do declare yourself BR, then your ex would be liable for the entirity of the shortdfall (as it was in joint names)

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First thanks for the advice,

 

It just seems to me, my ex holds all the cards still, I dont see the point in going bankrupt unless I get rid of the flat first, otherwise I could still be landed with a £25K debt after going bankrupt, beats the point really... I cant afford to live here anymore, Iv asked the ex to move back in to the flat, so I could move some where cheaper, and sort my life out, she refused(like I said, holds all the cards), basically because she doesnt want to be landed with the negative equity, all she says is 'it was a joint venture' and we are both liable, I guess she is correct, just didnt expect her to walk away 6 months into a 35 year mortgage!!

 

Im going to suggest we cut our loses and sell up, but how would it look selling up landing myself with more debt and then declaring myself bankrupt?? Will it look bad on me?? I have spoke to the CCCS and I have more going out than coming in, nearly to the tune of £300 a month.

 

Also how hard is it to rent once Im bankrupt?? Me and a few mates, who all know my plans, are thinking of renting together, this will reduce my housing outgoings by 50%!!

 

Also how much does the OR allow to live on?? I dont expect the life of riley, but are you allow enough to have ok life, I mean enough to eat, cover the bills, pay the car insurance and cover things like hairdressers etc???

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First thanks for the advice,

 

It just seems to me, my ex holds all the cards still, I dont see the point in going bankrupt unless I get rid of the flat first, otherwise I could still be landed with a £25K debt after going bankrupt, beats the point really... I cant afford to live here anymore, Iv asked the ex to move back in to the flat, so I could move some where cheaper, and sort my life out, she refused(like I said, holds all the cards), basically because she doesnt want to be landed with the negative equity, all she says is 'it was a joint venture' and we are both liable, I guess she is correct, just didnt expect her to walk away 6 months into a 35 year mortgage!! If you simply walk away, let them repo the house and finally declare BR then she would be entirely liable for the whole lot, so if you explain to her that it is in her best interests to at the very least communicate with you to attempt to come to a decision. If she isn't prepared to at least try to sort it out, then at least you tried.

 

Im going to suggest we cut our loses and sell up, but how would it look selling up landing myself with more debt and then declaring myself bankrupt?? Not as bad as you would think, given that the property is in part causing your current situation, bringing as many of your debts to a manageable position would actually be making the job of the OR far easier, instead of having to wait for the sale there is an outstanding balance Will it look bad on me?? I have spoke to the CCCS and I have more going out than coming in, nearly to the tune of £300 a month.

 

Also how hard is it to rent once Im bankrupt?? sort out somewhere to live before you actually go BR, if you are already in the property, most landlords are fine once you have explained your circumstances. Me and a few mates, who all know my plans, are thinking of renting together, this will reduce my housing outgoings by 50%!! if this is done before BR, then of course it would leave more funds to settle creditors, if it is done after the BR order is finalised then these funds would not be available to the OR

 

Also how much does the OR allow to live on?? I dont expect the life of riley, but are you allow enough to have ok life, I mean enough to eat, cover the bills, pay the car insurance and cover things like hairdressers etc???

 

There are no hard and fast rules on how much you are allowed, it can vary depending on the area and the OR concerned. You are allowed for reasonable living expenses and this does include car costs, hairdressing, food, rent. A general rule of thumb is that anything by way of a surplus over £100 would be halfed, the OR would keep half and you would keep half, but this is not exact and would depend on the findings of the OR's report. The purpose of bankruptcy is not to penalise you but rather to attempt to settle any creditors claims against your assets, as such there would be nothing to gain from having you live as a pauper.

 

It is normal for a person considering BR to make certain plans in advance, such as opening a basic Bank Account, (Co-Operative Bank is good) find an alternative home (if necessary) keep at least enough cash in your pocket to pay for one months outgoings, as the OR will freeze your bank accounts immediately, but may allow you to keep using one with no credit facilities.

basically, get your affairs in order prior to going BR

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Evening all, not posted for a while, as been trying to sort things with the ex(more fun than you can imagine!!)...the facts are, iv decided that bankruptcy is defo the way for me, i owe more money than you can imagine(well probably not, but its enough for me).

 

After speaking to the ex, she decided she wanted to sell this place before I go bankrupt, fair enough, except she wants me to pay half the costs, where she thinks Im gonna get that sort of money is beyond me, I have nothing left, I am flat broke.

 

When I said I think the best route is simply to have this place repossessed, she basically told me she would take me to court to prove that I can afford to pay the mortgage etc, I told her to go for it, I am right in thinking she has no case, we both signed the mortgage forms, and therefore the Judge would simply point out to she we are both liable and If I wont pay she would have to, he couldnt force me to pay...correct??

 

The plan is to go bankrupt in may/june time, in the mean time not paying the mortgage or service charge(I can add any arrears on the service charge to my BR??), allowing me to save up some cash, to help when I come to rent etc....would that be the best idea??

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Evening all, not posted for a while, as been trying to sort things with the ex(more fun than you can imagine!!)...the facts are, iv decided that bankruptcy is defo the way for me, i owe more money than you can imagine(well probably not, but its enough for me). Sometimes reaching the right decision is the hardest part, but I would suggest you seek a little free advice from the likes of the Insolvency Service, as you will need to show that this was a considered decision and not taken on a whim

 

After speaking to the ex, she decided she wanted to sell this place before I go bankrupt, fair enough, except she wants me to pay half the costs, where she thinks Im gonna get that sort of money is beyond me, I have nothing left, I am flat broke. I can understand her viewpoint, however if you don't have it then you can't pay it

 

When I said I think the best route is simply to have this place repossessed, she basically told me she would take me to court to prove that I can afford to pay the mortgage etc, I told her to go for it, I am right in thinking she has no case, we both signed the mortgage forms, and therefore the Judge would simply point out to she we are both liable and If I wont pay she would have to, he couldnt force me to pay...correct?? It is possible that she can have an assessment of earnings ordered by the court, but all that would do is prove how much you do or don't have.

You are both jointly and separately liable to pay the mortgage, if you stop paying then you are both still liable jointly and separately liable to pay the mortgage, if either or both parties cannot pay, then either or both parties can be pursued for missed payments, either or both of you can be served with defaults and either or both of you could have the property repossessed from you. and finally, either or both of you would be liable for any shortfall.

If either of you are declared bankrupt, then unless the other party is also declared BR they would be solely liable for the shortfall

 

The plan is to go bankrupt in may/june time, in the mean time not paying the mortgage or service charge (I can add any arrears on the service charge to my BR??), allowing me to save up some cash, to help when I come to rent etc....would that be the best idea??

 

I believe that the none paying of the mortgage/service charges etc to build a pot prior to BR is the norm in such a situation, however, you really must be seen to have taken formal advice on this matter (CAB, Insolvency service etc and so on) and I would also want to show that I have at least tried to sort this out with your ex. prior to effectively wiping out her credit and leaving her facing financial ruin.

 

The balance of looking out for yourself and not being seen to be a vindictive ex is extremely fine and you should make sure that all negotiations with your ex are made in writing and not just private conversations which can be later denied

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