Can I save the house?

[Mercedes Mechanic]

Here are the facts as they are at the moment

I was made bankrupt early this month. The petioner was the local council for business rates £41000.00 which are personally in my name and not in a business name. The reason for that is, too long to go into in this post.

I have other debts I have been struggling with for the last year and have not made any arrangements or payments towards in the last year, £40,000.00

My sole asset is the family home which is worth approximately £280,000 and I have a £100,000 mortgage outstanding on it. The mortgage on the property is in my sole name.

I have a meeting with the official receiver in a few days’ time and was wondering if anyone could shed a bit of light on what the official receiver’s stance could be in terms of options,

I know and understand their main objective is to pay off all my creditors and their costs.

My one and only asset is the house which everyone is telling me the official receiver will insist they sell to raise the funds to pay off all my debts.

· Is there any chance whatsoever that they will consider putting a charge on the property and allowing both myself and my wife to work off the debt over the next few years? considering that selling the house will make me, my wife and our 2 children homeless?

· Will they consider allowing me to sell the house for the best price possible to prevent trustees and other costs from ramping up the entire cost of this process and eating into all the equity?

· Is there even a slim chance that they will allow me to negotiate with the council to pay the £41,000.00 Plus costs over a period of time?

· Do I have any options at all apart from losing the house? Are there any circumstances in which they just might cut me some slack to avoid losing the house?

· My wife recently registered her marital rights on the property will this help?

· If my debts are more than my share of the equity in the property after taking into consideration my wife’s 50% what actions will the official receiver, consider in that instance?

Thanks in advance for any advice or guidance

Victor

 

[Gavin Bates]

Hi

I am sorry to hear about your troubles. I am assuming you are based in England and Wales.

In respect of your questions I will answer in the order you have put them;

1) Simple answer is no. The trustee's main job is to release your interest in the property on behalf of the creditors. It should be noted that the trustee can't do anything for the first 12 months because you have children. The following link provides further information. https://www.gov.uk/government/publi...ide-to-bankruptcy#what-happens-to-your-assets

2) This is possible but the trustee will want to see that the sale is progressing.

3) As you have already been made bankrupt there is nothing you can in terms of dealing with the Council.

4) If you can find a third party to make an offer for your interest in the party then this can be considered by the trustee. This may not be necessary the whole amount as you can argue that it saves on repossession and sale costs.

5) You should be able to argue that your wife has a 50% share in the property although this may involve a number of extra questions as to why it wasn't in joint names in the first place.

6) On the face of it your debts and the cost that the OR charges will exceed your 50% interest in the property. The guide (above) provides further details but they can look at contributions for excess income for example.

I hope this helps.

Kind regards

Gavin

 

[KAC]

@Lisa Thomas @Gavin Bates @Chris Callaghan will be along

 

[japancool]

Your wife could offer to buy your share of the property, but that would obviously be at market value.

 

[ChrisCallaghan]

Gavin's advice is spot on.

The only thing I would add to Gavin's advice is that is possible to be taken out of bankruptcy and into an IVA with the creditors consent. The costs of an IVA could work out to be lees than the costs of the bankruptcy. The property would still need to be dealt with in the IVA, e.g. an agreement to sell the property in 12 months or similar. However this would require the consent of the creditors and I have found that councils often vote against this, especially when they have been a petitioning creditor.

If you wanted to explore the IVA option I would suggest contact a licensed insolvency practitioner, however given your specific circumstances, I'd say stick to Gavin's advice.

 

[tony84]

Is there an income in the household?
It might be possible to raise either a mortgage or a secured loan to pay off the debts and clear the bankruptcy.

I can not advise on IVAs/Bankruptcy but from a mortgage perspective (ie thinking longer term) IVAs are terrible. Bankruptcy is like ripping off the plaster, drawing a line in the sand and in 3 years time you can look at getting a normal rate mortgage. An IVA you are in it for however long and only once it is cleared do the 3 years start before you can potentially look at a normal mrotgage.

I am not saying IVAs are a bad idea or that bankruptcy is any better, I am just saying looking down the road, bankruptcy usually makes things easier.

But if there is an income (as a ballpark of around £40-45k), you might be able to keep your mortgage and do a secured loan for the £80k or remortgage for the £180k.. chances are the secured loan route would be cheaper.

 

[Financial-Modeller]

...My sole asset is the family home which is worth approximately £280,000 and I have a £100,000 mortgage outstanding on it...

...selling the house will make me, my wife and our 2 children homeless...

No it won't. Selling the house will enable you to clear debts, and either move to a smaller home or rent a similar one.

 

[Lisa Thomas]

I agree with Gavin's comments.

Your only real options here are to sell it voluntarily with the O.R's consent, or find a third party to buy out the O.R's interest, otherwise you face (potentially if you do not cooperate) having it forcefully repossessed and being evicted after 12 months.

Alternatively if you have a rich benefactor who can pay off the total debts, costs and interest you can apply to have the Bankruptcy annulled. This will be expensive - over £60k and climbing by my quick calculations.

I suspect an IVA is too little, too late.

 

[Mr D]

· Is there any chance whatsoever that they will consider putting a charge on the property and allowing both myself and my wife to work off the debt over the next few years? considering that selling the house will make me, my wife and our 2 children homeless?



Victor

If you sell the house it leaves £180k less this debt in order to buy another property (excluding any mortgage you get on top) or pay for rent.
Being made homeless is entirely different matter and not to be confused with having to buy or rent somewhere else.
What you are looking at is being forced to move. Annoying but nowhere near homelessness.