Re the section on negative equity. We are considering bankruptcy but have several tenanted properties. All are in negative equity with mortgages higher than the current re-sale values of the properties. What would happen to these properties? Surely the mortgage company would object to a 'third party' buying the property for £1 and therefore becoming the mortgage holder? The rent still covers the mortgage on all of the properties, there's just no money in them and any sale would generate a net loss. Any helpful explanation would be welcome!
In theory the OR is not interested in property where there is no equity - it is the equity / asset value they want rather than the asset itself.
However any excess or rent over mortgage would be claimed.
In reality I suspect that the OR would return the properties to the mortgage companies because of the potential liabilities.
You should also consider what would happen if after going Br and becomming debt free that :-
1. The interest rate rises and the mortgage is more than the rent. Without disposable income this becomes a problem 2. A property is not let for 1 month or a tenent leaves without notice etc etc. This is a massive problem, 3. Properties require maintenance - bolier servicing etc etc . This is a problem.
You would not have the disposable income to counter these situations and they would create mortgage arrears, possibly eventually reposession etc.
If you are aiming to become debt free I would recommend you look at including all your potential liabilities and have a clean start
Paul Johns Assisted Bankruptcy Specialists Reviva UK
Re the section on negative equity.
Posted - 02 December 2008 : 00:13:34
