All Forums  New Questions  Forum Questions  Mortgage Shortfall - I think this is definitive

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Screensize: 640 x 480 800 x 600 1024 x 768 1280 x 1024 UserName: Password: Format Mode: Basic  Help  Prompt  Format: Font Andale Mono Arial Arial Black Book Antiqua Century Gothic Comic Sans MS Courier New Georgia Impact Lucida Console Script MT Bold Stencil Tahoma Times New Roman Trebuchet MS Verdana   Size 1 2 3 4 5 6   Color Black Red Yellow Pink Green Orange Purple Blue Beige Brown Teal Navy Maroon LimeGreen Message: * HTML is OFF * Forum Code is ON Smilies [quote][i]Originally posted by pix1[/i] [br]The following is from the Insolvency Service website; [b]Question: If my house is sold sometime after the bankruptcy order is any shortfall on the mortgage still a debt in my bankruptcy? Answer: A debt which is secured by a mortgage or a charge on a property is still a provable bankruptcy debt. The mortgage loan company is "a secured creditor" which means they have rights over an asset, the house, and can require the asset to be sold to pay their debt. These rights are not affected by the bankruptcy. On the making of a bankruptcy order the mortgage loan company could make a claim in the proceedings but, unless it wished to give up the security, could only claim for any (estimated) shortfall. If you continue to live in the property it is likely that you will continue to make payments to the mortgage loan company to avoid the property being re-possessed. When the property is eventually sold any shortfall to the mortgage loan company is still a provable debt in the bankruptcy, even if you have been discharged, as you are released from the debt on discharge. Your bankruptcy does not affect the obligations of any joint owner who has not been made bankrupt to repay the mortgage loan debt or any shortfall, as they are still liable for the whole of the debt. After the date of the bankruptcy order the mortgage loan creditor may ask you to sign a "deed of acknowledgment" of the outstanding debt. If you have signed such a deed the mortgage loan creditor can take action against you to recover any shortfall following the sale of the property. You may also find it helpful to read the Insolvency Service publications titled 'What will happen to my home'[/b] You can find the above at this link; http://www.insolvency.gov.uk/faq/faq.htm#16 Interesting points I have noticed from this; 1) Mortgage shortfall IS included as a bankruptcy debt PROVIDED the mortgage was taken out BEFORE the date of the BO 2) EVEN IF one pays mortgage payments after the date of the BO any mortgage shortfall accruing at a later date when the property is sold IS still included in the bankruptcy (this surprises me) 3) IT IS IMPOTANT [u]NOT[/u] TO SIGN ANY DEED OF ACKNOWLEDGEMENT AS THEN THE MORTGAGE COMPANY MAY BE ABLE TO HOLD ONE LIABLE FOR ANY MORTGAGE SHORTFALL WHEN THE PROPERTY IS EVENTUALLY SOLD. I THINK THIS WOULD USUALLY APPLY TO ANYONE HANDING IN THE KEYS IN A REPOSSESSION SCENARIO. I hope this helps anyone interested. [/quote]   Check here to include your profile signature. Check here to subscribe to this topic.