Mortgage Repossession Sale Shortfall/Bankruptcy

[Locoh]

Hi, I just wondered if anyone had any advice.

 

I had a joint mortgage with my ex-wife, and due to various circumstances beyond my control and after a lot of wrangling and confusion the house was voluntarily repossessed and eventually sold in February this year. Since the letter from a solicitors informing me of this I have had no contact from the mortgage company (Britannia). Given the sale price of £60k and the mortgage/arrears of about £95k I assume this leaves debt of around £35k. Due to my relatively low income level and some other unsecured debts I have no realistic ability to repay this unless its spread over a very long period of time. My ex went bankrupt in February.

 

On my credit reports there is no mention of the debt, only that it is satisfied. Now I am unsure of what to do. I believe the mortgage company has to chase me within 6 years from the sale. Should I contact Britannia? Or assume they will just chase at some point within the next 5 ½ years and therefore just declare bankruptcy now? Or wait and see what happens?

 

Another issue that is playing through my head is that my current car is on its way out and will need replacing soon. As I use it alot I would be looking at spending about £2k on a new one so that it will hopefully last a while, but I’m not sure if this is a good idea if I then go bankrupt as I understand if it’s worth any more than £500 they will tell me to sell it and buy a cheaper one, which would leave me in the same (unreliable) boat. Other than that I have no assets – no savings, no pension, no house (I live with family at the minute), and my car is worth under £500. I am also going to be starting a 3 year part-time course in September which is being paid for by my work, so I suppose this would run together with the 3 year payment term of the bankruptcy. However if there’s any chance of avoiding the bankruptcy it would be incredible, although I’m not expecting much on that front!

 

One further worry for me is that my girlfriend currently lives and studies a couple of hours drive away. We alternate the travel at weekends but if I did end up bankrupt would they allow petrol costs for this?

 

If anyone has any advice I would be very grateful.

[Ell-enn]

Do you know how the property was marketed for sale? - obviously it was sold under the price needed to clear the mortgage. The lender in possession of the property must ensure they achieve the best price possible and you are entitled to know the details of how the sale was effected.

[Locoh]

I received no information from Britannia, the first I knew of the price they'd put on it was when I saw it on rightmove in November last year for £69950. This was a shock as the last time any valuation had been done was when we remortgaged and it was at around £95k, although that was in 2007. I rang Britannia up and they told me they'd had 2 or 3 independent chartered surveyors and an estate agents give them valuations, and that the price of £69950 was the highest valuation they'd been given and that it was from the estate agents.

 

It then dropped to £65k after a little while and then again I think to £62k. As for marketing it was on rightmove, in the local paper, and there was a board outside. Other properties in the same area are on the market for between £62500 (same type of house but in worse condition - sold STC) to £80k for a terraced house on the same street which is in better condition but has no garage. However these 2 have also been on the market for about 6 months.

[sequenci]

Hello there.

 

I wouldn't really go by what your credit reference file might say - they are often pretty inaccurate.

Rather than having a limitation period of six years, mortgage shortfalls have a limitation period of twelve (although it's six years for any interest that accrues)

A car worth £2k is llikely to be regarded as an asset in bankruptcy and sole, should you look to replace your current one do think about spending around a thousand pounds instead (that is if you are seriously considering the bankruptcy route, of course).

Reasonable petrol/travel expenses are considered within a bankruptcy.

I'm sure you already know this that due to the rule of 'joint and several liability' since your ex-partner has become bankrupt it's now only yourself that will be liable for the shortfall.

As far as advertising the property for sale, it appears that the lender has done all that they reasonably need to with their marketing - they are under no legal obligation to spend any money in doing so.

 

- Seq.

[Locoh]

Thanks for the reply. With the 6 years I was thinking of the FSA guideline that says they have to declare their intention to pursue me for the debts within 6 years, so if they haven't done this within those 6 years they can no longer pursue me - is this the correct interpretation? I think I also read something somewhere on this site in a template letter about the Council of Mortgage Lenders having a similar policy?

 

Ok, if I bought a car and then later went bankrupt, do they also allow money for repairs, or in the worse (but not unlikely) case money to buy another cheap car? Having had an old car for a while I'm under no illusion as to their reliability!

[sequenci]

Oh yes the CML policy. All they need to do is make contact within the 6 years - just by sending you a letter. The OR should allow you to set aside money for tax, insurance, servicing etc.

How would you finance the new car?

[Locoh]

Well due to the fact that I was managing my finances relatively well before all of this I still have quite a lot of available credit, or I could borrow it from family. I'm aware that if do the former I will most likely not be able to pay it back, and if it's the latter it wouldn't be until after my bankruptcy before I could repay them. However if I don't have a car I won't really be able to get to work or see my gf so to me it's a situation to be avoided, and it's the reason why it's one of my main worries about going bankrupt.