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Bigal4787
forum expert
United Kingdom
641 Posts |
 Posted - 10 December 2010 : 00:18:03
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Hi,
as indicated in one of the previous posts, if you don't buy out the BI fairly soon after bankruptcy, it will get transferred to the RTLU who purely deal with the realisation of assets. As yours is in negative equity they'll then review the property at the 2 years and 3 month point to decide what to do with it, i.e for you to buy back the BI, keep it as it is, or if it's heavily in neg equity, revest it back to you early.
However, if you haven't bought out the BI and you then become unable to service the mortgage, and it gets repossessed, then any shortfall would be claimed in the bankruptcy, within the 3 year period. But if you were to buy out the BI, then it got repossessed, you would be liable for the shortfall, as it could not be claimed in bankruptcy.
Big Al |
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TheCat
Starting Member
United Kingdom
5 Posts |
Posted - 13 December 2010 : 23:47:43
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Hi, first post but my question is the same and I'm trying to get a definitive answer.
Bankrupt Jan 2010
AD 18/01/11
Sole property at approx -£12k neg equity
Live with wife who wants to move.
As I see it, if I bought BI I'm paying £1 plus fees to purchase a £12,000 debt - not good value....
But if I do nothing I automatically get property back in 2 more years
Option 3 - possibly my preferred option .... Vol repo property, shortfall is included in BR and we can find a new house with clean slate, my solvent wife to purchase jn own name ??
Fly in ointment...CCCS have told me Vol repo needs to be done before discharge to get shortfall included...others have said that as mortgage predates BR then shortfall would be included in BR even after Discharge ( as long as I dont sign Deed of Acknowledgement)
Are there any legal eagles who can give me a definitive answer as I really don't want to have to move in the next 40 days but I also don't want to start AD life with an unavoidable £12k debt |
Edited by - TheCat on 13 December 2010 23:51:37 |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 14 December 2010 : 00:29:04
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Hi,
this may be of help:
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'
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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TheCat
Starting Member
United Kingdom
5 Posts |
Posted - 14 December 2010 : 07:54:46
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BigAl,
Thanks very much for that - the most helpful and comprehensive answer I've had from anybody that's taken the time to read my question.
So basically to sum up in laymans terms, even though a 'shortfall' isn't created/crystallised until the property is sold, because it technically existed before the bankruptcy I can get it included at a later date even if I've already been discharged..?
That's the news i was hoping for...my wife can go property hunting af her leisure and when she finds something and buys it I can move in and Vol repo my existing flat without taking on a new debt. I could also nominally offer to buy BI from OR and retain flat making it available for rent as a much longer term investment.
As a second question should I inform my OR about any potential Vol repo before discharge or leave it til it happens? I'm <40 days away from AD and I don't want to put him in a bad mood and start him exploring ipa's again etc as so far hes been happy with my SOA
Any thoughts? |
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inapickle
Starting Member
15 Posts |
Posted - 14 December 2010 : 11:24:40
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Thank you once again BigAl
Can I also clarify this as well - this is the ony aspect so far of my Br that I am struggling to get my head around :-
1) At somepoint during my BR the OR will offer me the chance to purchase their interest in my property at £1.00 + £475-500 legal cost approx? (proeprty soley owned)
2) If I cant get the fee's together at the time, I can at any point during the three year period contact the OR to purchase the BI back from the OR subject to valutaions etc.
3) As I continue to pay mortgage and secured loan on the property will remain mine (as in I can continue to live here etc) and I can continue to live in it?
4) I have 3yrs to decide myself what I would like to do with the property. if my circumstances changed within the 3yr time period I can just stop paying the mortgage and secured loan, the house would get repossessed and once sold any shortfall would just be included in my BR - even if its after my discharge date?
Thank you once again BigAl
Lucy |
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debtinfo
forum expert
2826 Posts |
Posted - 14 December 2010 : 16:22:10
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all correct except a slight change in point 3
The property is actually vests with the trustee(OR) but that is totally different from your right to live there which continue to be yours until the OR applies to court for reposession (which is very unlikely with no equity) |
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inapickle
Starting Member
15 Posts |
Posted - 14 December 2010 : 17:00:58
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Thank you debtinfo - I've got my head around it now.
Lucy x |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 15 December 2010 : 00:55:15
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Hi Thecat,
When the OR submits the report to creditors, to your creditors once the examination of your affairs has concluded, it will show the property as an asset, and if in negative equity, that will be carried down to your list of creditors, to show as a shortfall(i.e. to inform your creditors that there is no interest in the property).
As stated, that shortfall will not crystallise until the property is repossessed/ sold, which as the OR is trustee for 3 years(unless they revest it back to you early due say to substantial negative equity)would allow the lender to claim the shortfall in the bankruptcy, as a provable debt.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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TheCat
Starting Member
United Kingdom
5 Posts |
Posted - 15 December 2010 : 08:04:57
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BigAl,
Thanks for explaining the behind the scenes process.
Out of curiosity is it worth me posting a current valuation/mortgage statement of the property to the OR or checking how I declared the properties value on my original assets/liabilities declaration.
I'm not sure whether out of pride/naiveity I would have put the property down as a small +ve equity. In my mind I always had it down as being worth c£110k vs a mtge of c£92k.
In reality now (with some arrears) the mtge is nearer £96k and I'd be lucky to get £85k (lots of brand new stuff been built locally and not shifting at c£95k mark) in a private sale let alone in auction. |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 15 December 2010 : 15:58:15
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Hi,
not sure how far up the road you are with bankruptcy but, once the original OR's office has dealt with the case, and if property is involved, it will then get transferred to an RTLU(regional trustee liquidator unit), however by the sounds of it that hasn't happened yet.
If you are looking at voluntary repossession, you could tell the OR, but the mortgagee will have to inform the OR of any dealings anyway.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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TheCat
Starting Member
United Kingdom
5 Posts |
Posted - 15 December 2010 : 18:17:55
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Big Al,
Thanks for the continued support - at the moment I'm eligible for automatic discharge on 18 Jan 2011, the year has flown by without a hitch and my most recent SOA hasn't been challenged so I haven't got an IPA in place so far....
If I can see the year out without getting an ipa then I'll be happy and can move onto what to do about the property in the new year
34 days to go.... |
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Purchasing property interest back from the OR
