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Thistimeforsure
Starting Member
4 Posts |
 Posted - 24 February 2010 : 12:37:00
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Hi All
I am on the fence at the moment between bankruptcy and an IVA. I think I will probably go the IVA route if it all works out, but I need to have my head straight about bankruptcy implications if it doesn't. My query is about my home. I know that if there is equity in my home the OR can seize it for sale, but I'm really not sure how much of a danger this is for me. My details:
- Joint mortgage with my wife of £175K (interest only)- original purchase price £206K if that makes any difference.
- valuations from 2 local estate agents last week (for IVA application) were based on a "quick sale because I need to move for work" rather than asking for a valuation for bankruptcy (which I'm sure they wouldn't provide)
- valuations received: £179,995 "allowing room for negotiation", and £175K to £190K "dependent on speed of sale required".
These valuations are troubling because they seem to indicate there could be equity in the house, but it would all be down to what a buyer was prepared to offer so it's not clear one way or the other. I imagine though that the OR could look at the valuations and decide to try their luck with seizure and sale just in case there are a few thousand pounds to be made.
Does anyone have an impression on how this might play out? If I put forward the £179,995 "allowing room for negotiation" valuation would they take my home? Of course I know you can't say for sure, but any ideas/experiences would be helpful.
One more scenario - if I used the above valuation or paid for a formal one by a surveyor that came in at, say, £180K I assume the OR would want the extra £5K equity. Because the mortgage is joint with my wife, would it mean that the equity they could take from me would only by £2.5K? If so, would this be the amount of "beneficial interest" that a friend or relative could purchase to save my home from being sold?
Finally (thank the lord I hear you say), if I have no equity or the beneficial interest is purchased by a friend so I get to keep my house, can the OR come back at any time in the future after the market has risen (hopefully) and demand that the house is sold for the increased value?
Sorry for this huge novel of a question!!!! |
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David F
New Member
United Kingdom
58 Posts |
Posted - 24 February 2010 : 13:43:44
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Hi Thistimeforsure,
I am in a similar position and I got three estate agent valuations based on the same scenario, they ranged between £190k being the lowest and £220 the highest. My mortgage is at £191 so I was in a similar dilemma to you. In the end I paid a suveyor £200 as I wanted to be as sure as I could be that the house would be safe in BR. The valuation came in at £185 and it is that valuation that I will use for the OR.
After speaking to several BR companies it would appear that buying the BI is not a "set in stone" process and you can haggle. Just because there may end up being £10k equity does not mean that you have to give the OR 100% of that. Do more research before you decide what to do and speak to Paul Johns at Reviva UK as he helped me make up my mind on what to do and when.
www.revivauk.com
You are right about the equity being shared 50/50 with the wife, so if there is any equity to be realised you only have to negotiate your half. Your wife's share would be excluded.
I hope some of this helps and good luck in what ever path you take.
Cheers,
David
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debtinfo
forum expert
2826 Posts |
Posted - 24 February 2010 : 13:44:29
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Hi, quite a few options, so here we go
First of all how much is your Beneficial Interest (BI). Assuming the valuations is correct at £180K and the the mortgage amount is £175K (you dont have any secured loans do you). This would mean that there is EQUITY of £5k. If the house is jointly owned and thee is no strong evidence that it should be split up any othe way the automatic position is that half of that amount £2.5K would be your BI. It is the BI that vests in the bankruptcy estate. Do note that the BI vests in the bankruptcy estate even if it is not worth anything at this time.
Ok the next thing to talk abiut is what is called a Family Home. Because you live there the house will be designated as a family home. This limits the Trustee to 3 years to deal with the property after which if the OR has not dealt with it in some way the BI is returned to you and no further action can be taken.
With me so far?
As stated above the OR (as trustee) can deal with the propert at any point during the 3 years but issues guidance as to what there usual protocol is, which is as follows
if the BI is negative they will offer it back as soon as possible fir the su of £1 plus legal costs. If you decline this, it gets put on the shelf for 2 1/2 years and then reassessed.
If the BI is possitive but less than £10,000 ish then the OR will offer it to you for what it is worth plus costs. again if you decline it goes on the shelf for 2 1/2 years and then reassessed.
If the BI is more than £10,000 the case will be passed to an Insolvency Practitioner who will press for either payment or to force a sale. Usually this takes several months and the judge can (but doesnt have to) give you up to a year to move out after which the needs of the creditor become paramount.
Reassesment.
if nothing has happened then after 2 1/2 years the OR will reassess the property to see if the equity has increased. If still in negative equity they will let the three years elapse and the BI automatically returns to you. If at that time there is less than £10,000 BI and you still do not want to buy the BI the OR will put a charge on the house instead of forcin a sale. If by this time there is more than £10,000 than it is again the IP and pressing for a sale route.
Hope that helps |
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Thistimeforsure
Starting Member
4 Posts |
Posted - 24 February 2010 : 14:09:10
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Thank you both SO MUCH for your time and trouble.
David F - it appears that a surveyor's valuation could be more realistic than relying on estate agents' valuations. If I interpret your post correctly, it appears the surveyor was "on your side" by offering a valuation that would keep your home safe in BR! I would certainly try the same tack.
Debtinfo - I have read a number of FAQs and forum posts on this, and no one has put things as clearly as you have! It appears then that if my valuation were to come at £180K my beneficial interest would be £2.5K (my half of the £5K that I would share with my wife) and so if a friend were to offer to buy my BI for £2.5K plus costs then my house would be out of danger. This is a major relief.
You have given me strength - bless you! |
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David F
New Member
United Kingdom
58 Posts |
Posted - 24 February 2010 : 14:27:23
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Hi Thistimeforsure,
Yes a surveyor is far more "realistic" with their valuation as they base it on ACTUAL achieved prices in your area rather than what prices are being shown in estate agent's windows. I would never recommend paying for an estate agent as your first move but as you have experienced, as I did, the almost blinkered greed shown by estate agents when valuing a property doesn't help when you are trying to get a "True" valuation.
I was completely honest with the surveyor and told him I was going BR. He also said that if the OR required a more up to date valuation, say in 3 to 4 months time he would be happy to drop the OR a letter explaining any updates in the local market for free.
This was a small local firm so maybe they are a little more helpful than the corporate big boys.
Good luck and let us know how you get on.
Best wishes,
David |
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My home - just so I've got the correct idea
