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| T O P I C R E V I E W |
| Blindshrimp |
Posted - 19 June 2008 : 17:20:07
Hi everyone
After discussing all my options and, well burying my head in the sand for way too long, I have finally come to the decision today to declare myself bankrupt...whilst this is a very very scarey option, it's all come as a bit of a relief to think that pretty soon this can all be over and I can start again. Oh and NEVER NEVER again will I start my own business!!! Ok I know never say never but it would take a whole hell of a lot of convincing!!!
However, I do need to know, I have a property which I rent out and the tenant's contract is not up until September...do I have to inform them? What do I do about the mortgage payments...as this is the only thing I have managed to keep up with? Do I just hand the keys back to the mortgage company??
I have been told that I fill out the form, make an appointment at the court (once I've managed to find £495!!)...but what happens after this? Am a bit sketcy on the details as I was previously looking into the IVA route, so would appreciate any help and advice anyone has...thank you in advance for this.
Apart from that I, like probably so many of you on this forum have just suffered through several years of worry and stress and to finally see a light at the end of the tunel is oh so uplifting!!! |
| 14 L A T E S T R E P L I E S (Newest First) |
| JulianDonnelly |
Posted - 22 June 2008 : 13:13:39
Hi Melanie,
Thank you (once again) for the clarification. The way I understood the post is that the Trustee would take all the rental income and then decide whether there was enough to pay the mortgage, and if not, put the debtor in a position where the mortgage company would go for reposession. Thanks for clearing that one up!
Regards
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk |
| melanie_giles |
Posted - 22 June 2008 : 12:45:17
Thanks Julian - Suzanne and I will continue to contribute to the forum, bringing our practical experience and technical knowledge to the forefront.
I cannot promise that we will always get it right, but the benefit of being a forum member is that I occasionally have to get out the textbooks and this is immensley valuable to my own CPD.
With regard to your last post - I feel you are rather comparing apples and pears. You cannot equate the Trustee's right to collect income derived from an asset which vests in him, and to pay the costs of the generation of that income, to the bankrupt's salary! Completely different I am afraid.
I assume that you are familiar with the role of a fixed charge receiver over property? And the rights and powers available under such an appointment. These same rights and powers are available to a Trustee and that is the way we operate when appointed to act. My point about the commercial viability of continuing to pay the mortgage relates to whether there is sufficient rental income to cover the ongoing payments. Is this now clear?
Could you explain from your own experience why you would be disturbed that a Trustee would act in the manner I have described above?
For an informal chat about any financial difficulties, or advice as to the options available, I can be contacted via my website - www.melaniegiles.com |
| JulianDonnelly |
Posted - 21 June 2008 : 13:55:19
Hi Melanie,
Apologies for the confusion. The way Suzanne worded her first post was a little misleading. Of course, as long as the Trustee ensures the mortgage is paid, that will be fine. However, I am a little disturbed that a Trustee waould act in this way. After all, if the BR was PAYE, they wouldn't get the wholse salary paid directly to them (ie the Trustee) surely? If we continue this premise, then surely what you propose is tantamount to the same thing?
As a question, what do you mean by paying the mortgage only if it commercially viable to do so? I would appreciate your clarification on this point.
Having said all of that, I really do value your input, as your experience as Trustee gives that extra dimension to all those on the forum. Keep up the great work!
Regards
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk |
| melanie_giles |
Posted - 21 June 2008 : 11:17:58
Let the OR deal with this. Is there any equity in the property?
For an informal chat about any financial difficulties, or advice as to the options available, I can be contacted via my website - www.melaniegiles.com |
| Blindshrimp |
Posted - 21 June 2008 : 07:14:56
Thank you all for your advice, the tenants contract has until September to run,the mortgage is currently on a fixed rate, which the rental income covers...however this is due to run out next month and subsequently increase where the rental income will no longer cover. I will not touch the renters money, they have paid it in good faith...and if I took it, it would feel like stealing/fraud. I just wanted to know the best course of action to take with regards to the house, or should I wait until I speak to the OR?
It is the only asset I have, after having sold everything else I owned to try to repay debts. I do not earn enough to cover the mortgage without the renters (and shortly not even this is going to be enough). I understand that I am going to loose the house and I've made peace with that, I just want to try to do the right thing by the renters. |
| melanie_giles |
Posted - 21 June 2008 : 00:00:16
I am going to agree with Suzanne on this point, as we both deal with this practically as part of our day jobs. If the property is solely owned, the Trustee will control the rental income and arrange for the morgage to be paid if it is commercially viable to do so. This could perhaps be equated to a similar role as a fixed charge receiver of the property.
The issue of the three year ruling is irrelevant. As an IP who regularly acts as Trustee in bankruptcy, my primary aim is to maximise the realisation of assets as quickly as possible, not to sit and speculate on the peaks and troughs of the property market indefinately.
The asset vests in the Trustee upon the making of the bankruptcy order - therefore the point of jeopardising ownership must also be irrelevant.
For an informal chat about any financial difficulties, or advice as to the options available, I can be contacted via my website - www.melaniegiles.com |
| JulianDonnelly |
Posted - 20 June 2008 : 12:35:38
Hi Suzanne,
The key here is that it is in relation to a secured debt. As it will undoubtedly be a buy-to-let mortgage, the mortgage will usually stipulate a rental yield of 125%. If the OR/Trustee takes the rental income, that would put the owner in breach of contract and jeapordise ownership (ie reposession following mortgage arrears). The OR/Trustee would therefore deal with the property as with any other, with the exception that there is no time limit under the 2002 Enterprise Act.
Therefore, I do agree that the OR/Trustee would allow them to keep the rental income in order to service the mortgage whilst they decide on the best course of action to realise the BR's beneficial interest.
Regards
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk |
| Suzanne |
Posted - 20 June 2008 : 12:27:26
Hi Julian
In my experience the Official Receiver would not allow a bankrupt to retain the rental income. If they were still able to pay the mortgage with out it then I'm sure there would be no objection to that. The OR has clear guidelines regarding dealing with investment properties, and it would be offloaded to a trustee at the first opportunity, but I guess if the trustee was prepared to allow them to retain the rental income in order to service the mortgage that could be a possibility.
Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
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| JulianDonnelly |
Posted - 20 June 2008 : 11:47:10
Hi Suzanne,
I'm afraid I disagree. The rental will be treated as income, and obviously the mortgage payments will still need to be made. The primary difference with an investment property and a residential property is that the OR has a maximum of 3 years to deal with a residential property, but no time limit for an investment property. In this case, the OR/Trustee can stick a charge on the investment property and sit on it forever and a day waiting to maximise equity growth.
Regards
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk |
| Suzanne |
Posted - 20 June 2008 : 09:59:35
Hi blindshrimp
You will need to inform the OR that you have a tenant in the property, but they or a trustee will deal with any notice to them. Any rental money you receive you will need to hand over to the OR (should the tenant not be informed of the ORs involvement before the rent is due). If you are going to stop paying the mortgage, you should let the OR or trustee know as soon as possible.
There is no need to give the keys back to the mortgage company until asked to do so, especially as there are no arrears.
Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
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| m and v |
Posted - 19 June 2008 : 19:48:29
You don't necessarily have to lose your house, an expert will advise you better on this but don't assume the worse just yet!
Yes life after debt is worth the hassle! Going to court and dealing with the OR are small hurdles in comparison to money worries. You'll get there x
Vicki x |
| Blindshrimp |
Posted - 19 June 2008 : 19:38:48
Hi
Thanks Viki and Sue...nice to hear that there is still life after all this stress!!!
Yes there is equity in my property....with the current market and taking into account fee, prob approx £15-18,000. This has been the hardest thing to let go of, but if it has to go to get life life back on track then so be it!! |
| m and v |
Posted - 19 June 2008 : 19:35:27
Hi Blindshrimp - love the name! Welcome to the forum.
As Sue has said one of the BR assist experts will be along soon to answer your property queries.
They will probably need to know whether there is an equity in the property to advise you - so if you could post a few figures for them that may help.
My experience of court was mmuch the same as Sue's - all over in minutes really. I was nervous but it was really very painless and the court staff were very helpful and understanding.
The OR interview was straight forward - lots of questions about my debt and how it had got out of control. Again very approachable person and very understanding of my situation.
Going BR has been the best decision I have made about my finances in years - the relief is huge - I sleep like a log - no more worries.
Hang around for an expert to fill in the gaps.
Hope this helps
Vicki x |
| debtfreesusie67 |
Posted - 19 June 2008 : 17:31:24
Hi Blindshrimp welcome to the forum. I don't know the answer about your property I'm sorry but one of the experts will be along soon. When I went BR I spoke to the Judge who was very nice and not at all what I expected a Judge to be like. The meeting with him was over with in under 5 minutes. It took about 2 days for it to finally sink in. Then I had a phone interview with the OR. He went through my debts with me asked how they were incurred and as I'm on benefits he didn't go into my outgoings.
It's amazing the sense of relief you get from just deciding to decide.
Hugs
Sue
The only way is up
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