Author Topic: Bankrupt and need help/advice  (Read 2072 times)

headsashed

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Bankrupt and need help/advice
« on: Jun 16, 2011, 07:33:30 PM »
Hi all
 hoping this forum can shed a little light on my predicament
In April of this year myself and my wife declared ourselves bankrupt due to spiralling debts and secured loans , we had been in a debt management plan for 3 years and felt we were getting nowhere.
 Now here's our dilemma we have decided we are going to hand back our house to the mortgage company and make a clean break from debt and rent a home.
 my questions are
 
 1. is it better to voluntary surrender or have it repossesed
 2. will any shortfall be included into our bankruptcy
 3. secured loans , what happens to them when we give house back to mortgage company
 
many thanks

James Falla

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Re: Bankrupt and need help/advice
« Reply #1 on: Jun 17, 2011, 10:29:20 AM »
Hi headsashed
 
In my view if you have already decided that your home has to go, I would surrender it voluntrily. Organise yourself somewhere to rent first, then move out and hand back the keys.
 
Assuming that you have not changed your mortgage since you declared yourselves bankrupt, it mut be treated as a contingent debt. ie any shortfall must be dealt with out of your bankruptcy estate. The mortgage company will not be able to chase you personally for the debt. This is the same for secured loans.
 
 
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headsashed

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Re: Bankrupt and need help/advice
« Reply #2 on: Jun 17, 2011, 11:19:51 AM »
Thanks for the prompt reply James...
 
so if i hand my keys back , who owns the house is it still me till its sold or is it the mortgage company? and when do the secured become unsecured? 
 
thankyou

James Falla

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Re: Bankrupt and need help/advice
« Reply #3 on: Jun 17, 2011, 12:10:27 PM »
No problem at all headsashed
 
When you were declared bankrupt I assume you did not buy back your title to the property from the official receiver?? As such, OR currently owns the property. Once you hand your keys back, the mortgage company goes through the legals to reclaim the title from the OR. It can then force the sale. However, this really make little difference to you.
 
The secured debts become unsecured as soon as the property is sold. However even if this is after you have been discharged, they are still covered by your bankruptcy as they existed at the time you were declared bankrupt.
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headsashed

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Re: Bankrupt and need help/advice
« Reply #4 on: Jun 17, 2011, 12:35:32 PM »
OR has it all then as ive signed for nothing as we decided it be better to make a clean break if we were going to do such a thing....  house is in neg equity too

James Falla

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Re: Bankrupt and need help/advice
« Reply #5 on: Jun 17, 2011, 01:26:49 PM »
Given the house is in negative equity, it is important to understand that the OR will probably just hand you back the ownership in 2 years time. However, if you really just want to have done with it, then handing the keys back seems to be the best option. This will give you the clean break you are looking for.
 
Have you thought about where you will rent? If you are going to speak to a letting agent, bear in mind that your credit rating will have been negatively affected by the bankruptcy and this will show up if they do a credit chack on you. As such, best to mention this to them in advance to save wasting any time if they are unable to help you (most letting agents will be OK though).
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