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April.sn
Starting Member
1 Posts |
 Posted - 21 June 2011 : 07:19:57
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| My friend bought house back for a pound. He rented it out. It is now empty but he can't afford to do essential repairs eg replace broken boiler, or replace kitchen units, replace doors, electrics, etc to make it fit to rent. He hasn't got the money to pay out for repairs and pays the mortgage. He lives with his mother and does not want to live in the property. I believe it is two years since his bankruptcy. The house had £80000 mortgage, £4000 paid but only worth £60000. What option would you advice: (a) stop paying mortgage and let it be repossessed but will he be liable for deficit when house sold? (b) what chance has he of getting money to do up property? (c) other options? Thank you in anticipation of your advice. |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 23 June 2011 : 15:25:01
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Hi,
If your friend purchased the BI(beneficial interest)for £1, then he will be liable for any shortfall as it cannot be claimed in bankruptcy. However, given the situation and he doesn't want to live in it, why did he buy back the interest in it, as this is the problem( or was,as you can no longer but back the interest if in negative equity) because if problems occur later, then you become liable if repossessed.
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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debtinfo
forum expert
2826 Posts |
Posted - 23 June 2011 : 19:22:39
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| I dont agree as the frind is not party to the mortgage agreement and buying the interest is simply a swop of the equity not the mortgage |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 24 June 2011 : 15:30:00
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My answer is based on the procedures carried out by OR's at the time, in that yes the BI being purchsed is a swap of the equity not the mortgage, and in the event of the sale of the BI being completed, the secured creditor can in the event if neccessary claim any shortfall in bankruptcy, BUT they also had to be advised that part of the transaction could involve the secured creditor requiring a deed of acknowledgement of debt being completed which could mean the secured creditor being entitled to commence recovery action in relation to that debt. However, what they should do in relation to the deed of acknowledgement of debt was something I could not advise on, the only thing I could advise, was that potentially they could be liable for the shortfall in future if things went wrong.
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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debtinfo
forum expert
2826 Posts |
Posted - 24 June 2011 : 17:34:43
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Yep that is accurate, the important point being that it is NOT the buying the interest that would make you liable but the signing a deed of acknowledgement that would
so as the OP has not said if they signed a deed then we cannt say fo certain either way |
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My friend bought house back for a pound.
