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veersix
Starting Member
3 Posts |
 Posted - 20 March 2009 : 15:05:57
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Hi,
I spoke to NR this week about handing my house back to them. I have now received the form they want me to sign. Reading through various forums, everyone screams don't sign anything, but if I don't the repossession will drag on for months and I shudder to think what kind of state the house will be in once the local vandals realise it is empty. The only bit that I think seems to cause problems, the Deed of Acknowledgement people seem to call it, is the paragraph that says:
quote:
"I/We understand that should sale proceeds be insufficient to pay off the total amount outstanding, Northern Rock and/or any Insurer Mortgage Indemnity Cover (if appropriate) reserve the right to pursue me to recover the shortfall."
To me this seems to say that if there is a shortfall, which there will be, they can pursue me for it, which they will whether I sign the form now or let the repossession drag out. When they pursue me for it, at that point I will be unable to pay the shortfall and plan on going IVA or BR, BR being the more likely option.
So, I don't really see that signing the forms now, as I'm not currently BR, is a problem. Am I missing something fundamental? I can see how it could a problem if I was already BR as they would pursue me for the shortfall post BR perhaps. I'd like to get the repossession over and done with as soon as possible really and signing the form seems to be the best way of doing that, but equally, I don't want to be always looking over my shoulder as it were. If I signed this would they still be able to chase me following discharge from BR?
Thanks. |
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Mr.E.Guest
Junior Member
United Kingdom
121 Posts |
Posted - 20 March 2009 : 16:06:02
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Hi,
I'm not an expert and I'm sure that someone more qualified than I will give input - however my own advise is don't sign anything.
We moved out of our house in November - informed the bank in December and sent the keys back in January - we would not sign the forms because by signing if there is a shortfall clause and you accept liability the bank can still pursue EVEN IF YOU THEN GO BR!!!
We had a dialogue with them about having sent the keys back but they refused to acknowledge this (even though we sent them recorded delivery and it stated receipt of them on their records) - they issued a court repossession order our case was in Feb - we didn't attend but got an order telling us to vacate and hand keys back.
Now when we go BR we list securred debt on the mortgage and unseccured on any shortfall - even if the house has collapsed its not our problem - also make sure yo utell the Council so council tax is placed into category C or you will be incurrin more debt.
Hope this helps
What doesn't kill you makes you stronger (I hope ;-) |
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Melanie.n
forum expert
United Kingdom
1282 Posts |
Posted - 20 March 2009 : 16:35:19
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Hand the keys back, a sensible option is to do this by recoded delivery and Mr.E Guest states but do not sign the deed of acknowledgement.
When completeing the form for bankruptcy list the mortgage on the secured creditor page (section 4) and also list the mortgage creditor for £1 on the unsecured page with your credit cards, loans etc, (by listing for £1 the unsecured element which will arise following the sale of the property known as the 'shortfall' will be included in the bankruptcy regardless of the eventual figure.
Hope this helps
Melanie Nicholas
28 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
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veersix
Starting Member
3 Posts |
Posted - 20 March 2009 : 17:10:36
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Thanks to both of you for the advice. They said they don't want the keys back as they'll change the locks anyway, so I'll just send them a recorded delivery letter saying that I'm surrendering the house back to them.
Can you provide an explanation as to why signing the form before BR is so frowned upon though? I can understand why you wouldn't want to sign it post BR.
Cheers. |
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Mr.E.Guest
Junior Member
United Kingdom
121 Posts |
Posted - 20 March 2009 : 17:45:09
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Hi,
if you sign the form and there is a shortfall clause what in effect you are saying and comitting to is that no matter what you accept reponsability for the shortfall - ie even if you go BR you have guaranteed that you will pay the shortfall and from what I can gather this is binding - so even when you are discharged they will be after their money!
Hope this helps - just don't sign.
What doesn't kill you makes you stronger (I hope ;-) |
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veersix
Starting Member
3 Posts |
Posted - 20 March 2009 : 18:20:16
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Yes, very helpful thanks  |
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David
Starting Member
United Kingdom
14 Posts |
Posted - 22 March 2009 : 07:24:30
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Melanie, what you have said follows the advice given to me last week on preparing SOA. Mr Guest seems to be saying that even if declaring bankruptcy after having signed the form the Mortgage company can still pursue the debt after discharge. Could you clarify this please. I don't believe that his understanding is correct. Provided the letter is signed before bankruptcy is petitioned then any shortfall will become an unsecured debt and be extinguished by bankruptcy. There can be no comeback later. Different story if you sign anything after bankruptcy. Agree with general principle not to sign anything. quote:
Originally posted by Melanie.n
Hand the keys back, a sensible option is to do this by recoded delivery and Mr.E Guest states but do not sign the deed of acknowledgement.
When completeing the form for bankruptcy list the mortgage on the secured creditor page (section 4) and also list the mortgage creditor for £1 on the unsecured page with your credit cards, loans etc, (by listing for £1 the unsecured element which will arise following the sale of the property known as the 'shortfall' will be included in the bankruptcy regardless of the eventual figure.
Hope this helps
Melanie Nicholas
28 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
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Edited by - David on 22 March 2009 08:48:48 |
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John
New Member
United Kingdom
73 Posts |
Posted - 23 March 2009 : 01:03:30
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Hi
the following extract has been taken from the government insolvency website.
I think what may be being missed here is that a deed of acknowledgement signed pre bankruptcy can be upheld by the lender on the basis that the shortfall debt does not become unsecured until the property is sold. As the property is sold post bankruptcy it is not included in bankruptcy if the Deed of Acknowledgement has been signed as by definition the acknowledgement states that the mortgagee / bankrupt understands that the shortfall when known is a new debt.
33.154 Deeds of acknowledgement of debt – Solely owned property
A secured creditor may request a bankrupt to complete a deed of acknowledgement of debt when the sale of the property results in a shortfall. A secured creditor may request this transaction so that no dispute will arise as to the amount of the shortfall or so that proposals to repay the unsecured portion of the debt by instalments can be settled. However, the secured creditor is entitled to claim in the bankruptcy for the unsecured balance of its debt and it will be up to the trustee to deal with such a claim. If the bankrupt completes such a deed, a new debt might be created on which recovery action might be based at any time within the limitation limit. It is not for the official receiver to influence the bankrupt about how to proceed in this matter. The official receiver should consent to the completion of a deed of acknowledgement of debt and if he/she becomes aware that the bankrupt has been requested to provide such a deed, the official receiver should suggest that the bankrupt seeks his/her own legal advice.
John White
England Jackman & Spacey |
Edited by - John on 23 March 2009 01:09:49 |
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Melanie.n
forum expert
United Kingdom
1282 Posts |
Posted - 23 March 2009 : 07:51:58
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Hi David, please read Johns excellent (as always) post - I always advise clients NOT to sign anything, Joh has provided a detailed explanation as to why we advise not to sign
Hope we have all helped you
Melanie Nicholas
28 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
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David
Starting Member
United Kingdom
14 Posts |
Posted - 23 March 2009 : 11:51:32
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Thanks melanie and John. I'm not sure whether Paul has the same idea. I don't want to cause any problems because you guys are so helpful and if it is now going to be safer for me to wait until the property is sold by the mortgage company before going BR so be it. We live and learn. In a posting on 15th March I picked up on shortfall in proceeds on repossessed property and had been advised in a local bureau that to sign the acknowledgement last year was Ok as if I went BR subsequently the hsortfall would still feature as part of the bankruptcy. The advice from Paul was to complete the secured creditor section of SOA with the mortgage amount and to put the estimated shortfall in the unsecured section and he said provided this was included I will be fine. I am now near the point at which I am going to file for BR but it seems that I should play safe and wait for sale of the repossessed property. Needless to say it has been empty for ages. quote:
Originally posted by Melanie.n
Hi David, please read Johns excellent (as always) post - I always advise clients NOT to sign anything, Joh has provided a detailed explanation as to why we advise not to sign
Hope we have all helped you
Melanie Nicholas
28 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
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Melanie.n
forum expert
United Kingdom
1282 Posts |
Posted - 23 March 2009 : 15:26:19
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Just to state once and for all so that there is no confusion -
Complete the forms with the secured creditor (mortgagee) listed in the correct section (8)current property and in section 4 first page 'secured creditors' providing full details of mortgage account number approx outstanding balance etc ALSO list the secured creditor (mortgagee) on the 'list of unsecured creditors' for £1 (2nd page section 4) then regardless of when property is sold and shortfall known, it is included in the bankruptcy and they cannot come after you for payment regardless of the amount.
Melanie Nicholas
28 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
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Northern Rock Voluntary Repossession Form
