debt and bankrupcy help

[karenr31]

can anyone advise me can we do the voluntary surrender even after the morgage lender has started legal proceddings to reposses ?

or do we have to do this before it gets to this stage,

 

we are trying to get enough money together for the BR and need to save for rental deposit too,

its makes sense to try and stay in the property for as long as we can, we expect this to be around 4 months.

 

what would be standard procedure from lender before action taken.

 

Also do we just ignore letters as we have no intention of comin to any arrangement to keep the property.

 

please can anyone help.

 

we are in Scotland

[Crocdoc]

You may wish to consider Bankruptcy at this stage and make an application under the Scottish Government Home Owners Support Fund (Mortgage to Rent Scheme) Applications can only be made by organisations such as CAB who provide free money advice. I cannot guarantee acceptance as there is a strict criteria that must be met, however it is worth a try.

 

As your home is in negative equity the trustee would have no interest in the property and any shortfall would be written off in the Bankruptcy. It is unlikely that the lender would object to an application as they will be receive full value in the event that a Social landlord such as your Local Authority or Housing Association were prepared to purchase the property.

 

In any case such an application will almost certainly stop further action and will only be progressed in the event that the application failed.

 

It is also possible that if you take advice you may be referred to the Civil Legal Assistance Office in the unlikely event that lender continues to pursue through the courts.(Subject to Legal Aid entitlement)

 

This proposal is based on the limited information available and acceptance cannot be guaranteed.

It Is unlikely that your Co-op account will be closed, however make sure it is not in overdraft.

[IdaInFife]

re the bank account - it is the bank themselves who decide but the coop is one of the ones we find will not close the account

[Crocdoc]

I have had a further read into this one and there are various scenarios, In returning to my earlier post Bankruptcy and Mortgage to Rent is in my opinion worth considering. However there is also another way to look at this, you state in your initial post that you are about to go into mortgage arrears and you have come to arrangemnts with other creditors. I am therfore assuming that you have no mortgage arrears at this stage and you are paying unsecured consumer credit debts. (Please correct me if this assumption is wrong)

 

If I am correct, then by ceasing all payments to unsecured creditors and maintaining mortgage payments there is no reason why you cannot stay where you are at present. Due to the negative equity you are technically only renting from the bank at the moment anyway. Therfore if you Bankrupt the property would be of no interest to Trustee as previously mentioned. In addition, the motgage provider will probably be happy to continue with your mortgage arrangement in the knowledge that they will take a substantial hit in the event that you give voluntary possession.

 

In returning to the involvement of the Trustee following Bankruptcy, please note the following.

 

The trustee will have no interest in selling the property if it is of no value to the client; for example, where the whole value belongs to a building society as a mortgage. (The building society can still decide to sell the home and may do this if the client is in arrears with mortgage payments). However, the home is still an asset and if prices rise it may be sold in the future by the trustee, even after the client's sequestration has been discharged because the trustee remains in post until all assets have been dealt with. However, if the trustee doesn't take any action in relation to the client's family home within 3 years of the date of sequestration, then it must be returned to the client.

 

The latter sentence is particularly important as it is highly unlikely that the property market will recover to the extent that your home will have equity in such a short period of time.

 

On the other hand if you are unable to maintain mortgage payments then I refer you back to my earlier post.

 

Once again this suggestion is based on the limited amount of information available.

Edited January 17, 2013 by Crocdoc

[karenr31]

HI crocdoc,

first of all thank you for responding to my sos,

we have no intention of trying to keep the house as we are living on an overdraft every month and it is not sustainable any more.

 

we have a rental lined up for around may.

we will not pay our mortgage or other debts this month and decided bankruptcy is the route for us.

we are going to save the money for deposit and rent etc over the next couple of months.

we are not in arrears as of yet but are in payment arrangements with other creditors and we will also be stopping payments.

 

my query is how long is it before the mortgage company is likely to start repossession?

and when would be the best time to do the voluntary repossession? before or after proceedings start.

 

I am on the understanding that if we hand the keys back the house will go on the open market and any shortfall could be included in th eventual bankruptcy. but we want to hold off as long as possible to get some money for br and deposit etc.

 

thanks you again

[Crocdoc]

Two things here, first of all as you have no arrears at present, I think I can safely say that you will be safe to sit until May, some lenders do act quicker than others and it is possible that you will receive a Calling Up Notice, however this is nothing to worry about as the issue will need to go through the courts to gain possession after the notice expires, Lets be Hypothetical here, lets say that you get the calling up notice in April, (Although Unlikely) simply offer them possession of the property on the day after you move to your new home.

 

As you will still almost certaily still be regarded as a home owner when you decide to Bankrupt you will require a Certificate of Sequestration, this can be obtained through the free Money Advice Centres once your entire situation has been evaluated.

 

Anything else come back to us.

 

GOOD LUCK.

[karenr31]

Thank you very much, this has put my mind at ease, first payments will be missed 28th this month and we have already put the money in another account.

another question please, is there a letter template on voluntary surrender or do we simply hand the keys in and wait for them to sell and see what the shortfall is and include the shortfall in bankrupcy. or when we fill in the forms with debts for cab do we just put all debts including full morgage outstanding and arrears? sorry so many questions and probably get alot of the answers when we have appointment for the debt advisor .

[Crocdoc]

I would simply contact the lender and they will send you out forms to sign.

 

YES, put the full outstanding balance into the Bankruptcy, The secured lenedr will obtain the funds from the sale and the remainder will form part of the Bankruptcy.

[karenr31]

Thanks , the secured loan is part of the morgage so that should be straight forward. is there anything in the forms we shouldnt sign? lots of posts saying not to sign something as it would mean liable for the shortfall?

[Crocdoc]

Regardless of what the forms state, if you Bankrupt following the release of the property the debt will automatically be included. There can never be a clause in a contract that attempts to deprive you of Stautory Entitlement.

 

Your original loan agreement may well state the same clause, however that makes no difference.

 

The only time that the debt wuold not be incuded would be if you Bankrupt in advance of releasing the property and did not include the mortgage.

 

I hope this information is of assistance

[MSAR]

Can your arrange a mortgage holiday? You stop making payments for six months or more until things are sorted out.

[Crocdoc]

Very much depends on the type of mortgage and the terms and conditions of the original agreement, payment holidays DO NOT apply in all cases. Threfore if not available and you are SURE you want to hand back the keys, you might as well default.

[karenr31]

Thanks for the info but we are sure we want to hand the keys back so we are just going to default .

[Crocdoc]

No problem, eviction is some way down the line.

 

GOOD LUCK.

[karenr31]

just another question, we will most likely have an ipa for 3 years, if say one of us is made reduntant after being discharged does any redundancy go to the or? also if say a family member offered to pay the 3years ipa to end it early would this be allowed?

[IdaInFife]

Any redundancy payment will need to be notifed to your trustee.

 

Any windfall from family has to be notified as well. Unless this clears all your debts it will not end your ipa

[karenr31]

Thank you Ida, just trying to cover all possibilities.We have now missed our first morgage paymant and stopped paying all but essential bills so we can try get the deposit for rental and BR money.Im sure the letters will start soon but have come to terms with that.just a case of hanging on as long as possible.x

[karenr31]

Hi again, Well thats the phone calls started ! around 30 calls in last 3days, should we speak to creditors or just ignore and let it take its course? we have stopped all payment to save for bankcrupcy and hope to hold of until end april when we will hand back keys and go down the BR route.

[IdaInFife]

Its up to you but for your own sanity you may wish to ignore

[karenr31]

I have another question and looking for advice please.

 

If we are not given an income payment arrangement at the start of Br can this be given after the 12 months?

 

the question is can an ipa be added after the discharge?

The reason i ask this is i currently work full time and im struggling with depression and to cope at work,

my manager has offered to reduce my contract hours to 16 hrs per week,

would this be frowned upon if i do this and then in a few months go BR,?

 

as if i do it would probably mean we wouldnt have an ipa i think.

[IdaInFife]

It cannot be given after your discharge. Circumstances do change and trustees will take this into account .

[karenr31]

Hello again! can anyone tell me when the OR does our soa will he base any ipa on joint income as we are both going BR or will it be done seperately? many thanks in advance.

[IdaInFife]

joint

[karenr31]

Thank you

[IdaInFife]