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| leigh_b |
Posted - 10 September 2008 : 12:17:37
Hi I am bit confused I am going bankrupt on the 26th of september I own two properties one of which I rent and one i currently live in. Both are in negetive eq as I purchased them both last year. I also have 60k of unsecured debt to add to the 25k neg eq. I want to confirm that as long as I include this as part of my debt as I want to hand both properties back to the lenders that I will not be liable in the future for the Neg eq on both properties and it will be included in my bankruptcy debt helpline said it would but on your forum Julian said it would not as it was a secured debt. |
| 3 L A T E S T R E P L I E S (Newest First) |
| pix1 |
Posted - 10 September 2008 : 13:00:35
Update on my previos reply:
To put it more exactly I should have finished my previous post as follows;
"No, I think the key thing is that you cannot be chased for an unsecured debt which relates to a mortgage transaction from BEFORE your BR date PROVIDED you do not make payments on any mortgage or loan on the property AFTER your BR order." |
| pix1 |
Posted - 10 September 2008 : 12:53:48
My wife and I have gone Br and have been in a similar situation, though only one property.
Any mortgage outstanding on both properties is a SECURED debt. These should both be listed in the secured debt section of your BR petition.
Any equity in these two properties would be assets in your BR.
Your mortgage loans on each property will predate the BR order and so will form part of the BR.
Any mortgage shortfalls if and when the properties are sold AFTER the BR order will become UNSECURED debts and will join any other unsecured debts in the unsecured debts section of your BR petition.
It is a good idea to flag and highlight the likelihood that there will be mortgage shortfalls on these two properties once they are sold by listing them both PROVISIONALLY in the unsecured debts section of your BR petition. This will alert the OR to the potential situation and assist him/her in dealing with the respective mortgage companies when he contacts them.
So, you may rest assured that no debt collectors will be able to chase you for any mortgage shortfalls in the future.
There is one proviso, however and a warning:
If you continue to make mortgage payments on either or both of the properties any time AFTER the date of the BR order the mortgage companies may be able to say that you intend to keep either or both of the properties and then, at a later date up to 12 years in the future, chase you for any mortgage shortfall on any future sale.
If you are letting out
I advise 1) STOP all mortgage payments as oon as you go bankrupt if you want to avoid being chased in the future for mortgage shortfalls and 2) give appropriate notice to any tenants on the property which I believe you are not living in. you should find you can stay in the property you lve in for several months after stopping payments on the mortgage on it.
There is a slight anomaly when filling out the forms for the BR petition in that in the I&E section you might put down what your monthly mortgage payments are at the date of the BR order but, in fact, you should update the OR as soon as possible after the Br order that your circumstances are changing and you are not now making mortgage payments. Of course, you would presumably need to save up to rent a property once you have moved out and/or your own properties are sold off.
I think this is correct, at least, it is based on my experience so far. It would be a nasty shock if my wife and I got chased in the future for mortgage shortfall and would precipitate another BR! No, I think the key thing is that you cannot be chased for an unsecured debt which relates to a mortgage transaction from BEFORE your BR date.
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| John |
Posted - 10 September 2008 : 12:23:59
Hi
it's a confusing area I know but I think you have misread the context of Julian's post.
Whilst the property remains in your ownership the mortgage etc remain secured and therefore not included in bankruptcy.
Once repossession takes place and the properties are sold the shortfall becomes an unsecured loan which will be written off in your BR provide you list the 2 properties in both the secured and unsecured parts of Section 4 on your Statement of Affairs.
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