Both myself and my wife will declare ourselves bankrupt next week with a total of around £500k debt, however we would like to stay in the house, here are the figures and would this be possible and what should we do first?
House worth approx £220k with a first mortgage of £265k, this is not in arrears and has been overpaid by £3K, IT IS A INTEREST ONLY. We have a second charge of 70K with Picture which we have not paid for 12 months and they are not pestering us as it would be no use to them to apply to the 1st mortgage for reposession.
The official Receiver is interested in 3 main areas:-
1. Conduct prior to the bankruptcy petition - i.e. how the debt arose etc
2. Realisation of assets for the benefit of the creditors
3. The ability to contribute towards the debts from monthly disposable income.
With regard to the house there is clearly no equity in the property ( although technically the OR may go after the £3k overpayment as this will show on the mortgage statement unless youhave specifically asked for the 3k to be applied against the capital )
As an aside the OR will definately ask what the 70k Picture mortgage was used for and is likely to ask for proof of it being used for consolidation ( which cards when etc ) or how / when it was introduced into a business ( assume there is a business because of the 500k)
The area that you may have some difficulty with is the disposable income. The OR may, depending upon your mortgage repayments, take the view that your mortgage outgoings for 1st & 2nd mortgage are extreme and suggest that you look at an equivalent rented property . The reason for this is that if they can vastly reduce your monthly outgoings you may then have disposable income which will form part of an Income Payment Agreement.
With a court hearing next week you should at the very least have a conversation with an expert and potentially consider postponing the date because this is something that you will require time to reflect on.
Last point - If the house is now worth £220k is it a good deal for you to effectively pay £335 for it?
Both myself and my wife will declare ourselves bankrupt
Posted - 08 September 2010 : 07:55:07
