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does house repossession always lead to bankruptcy?(12 Posts)
Will try to keep this as short as possible. Exh & I separated 4 yrs ago. Joint mortgage. From day one he stopped paying the mortgage, (previously we paid together/shared all bills). Chose to have no contact with our 2 young dc's & generally just behaved like an utter shit.
Anyway, after a yr of me solely paying the mortgage I decided I wanted a new start away from the town we lived in & from the miserable memories of joint home. Ex shit text me to say to do what the fuck I wanted with the house. Put it up for sale for a few months, no luck selling so rented it out. No equity in the house, rent only covers mortgage with small amount over. I've been privately renting in this time.
Now my dilemma is that the tennants are moving out & as of next month the mortgage will need to be paid & I have no means to do this! I've put it to my solicitor to inform him that he can play landlord now, try to sell it himself or whatever but I'm doing bugger all else. I know they are separate issues but in the 4 years I've not had a penny in child maintenance & have had to fork out a lot in maintenance on our 'joint' home. I just feel like he has really taken the piss.
So if he doesn't man up to his responsibilities re up keeping mortgage payments by any means what is the time frame for repossession & what are the implications for my future if this happens? I'm sorry I didn't just walk away from it all 4 yrs ago! Any advice much appreciated & sorry for the essay!
If you are both named on the mortgage , you are both liable for the debt. If selling covers the outstanding amount and arrears then you can walk away if not the lender can pursue you for the difference , bankrupting you if needs be. The timescale won't be easy for anyone to give you, normally it is a few missed payments before action is taken. The danger is that if it is repossessed it will be sold for even less than you might achieve now as a quick sale and your liability to make up the shortfall increases.
Thanks for your reply LIZS.
If repossessed there will be a short fall, does anyone know if this is usually expected immediately or if it's common practice for a payment plan to be considered? So worried about it all. Sales are very slow in that area & even if up for sale it would likely take a long time to sell. No chance of a mortgage break I don't think as it's on interest only payments anyway.
In theory once you default they would try to get a payment plan in place to avoid repossession , so if that hasn't worked and the property is sold they would look at the most likely way to recover any losses, which may well be bankruptcy.
I'd recommend you talk to somewhere like CAB before you make too many assumptions. Lenders are really reluctant to repossess homes at the moment because they won't get anything like their money back at auction. I think, with help and if you keep your lender in the picture, you could potentially navigate this through to a successful sale and avoid bankruptcy
I would definitely enquire about a mortgage break, the repayments being interest only shouldn't stop it, you normally get the option to take one or two 3 mth mortgage breaks during the term of the mortgage.
So if you've been renting it out for ages your mortgage must be on a buy to let? That means your repayments are higher than they would be otherwise, can you enquire about changing the mortgage back?
Second comments about asking for a mortgage break and talking to your bank about the situation to see how they can help. They may allow payment holiday while you are trying to sell or alternatively while you find another tenant. If you are putting on market to sell, you will need your ex's agreement if it is in joint names.
Sunrise you must absolutely avoid a repossession at all costs. It's not whether you'd have time to repay a shortfall, you'd be faced with a very large debt, often disproportionately larger than any debt you may incur through unsecured credit debt. Sure bankruptcy would be an option but why prepare for the worse?
I think the most starlight forward solution would be to spend a fee thousands, if you can, to do it up and try to sell for a decent price that doesn't leave you in debt. Like Cogito says, as long as you keep your mortgage lender in the picture chances are they'll give you a few months at least to sell the house without having to pay - or on reduced payments. Otherwise can't you try to rent it out a again?
How large is the shortfall likely to be? And do you also have unsecured debts?
"In theory once you default they would try to get a payment plan in place to avoid repossession" that isn't the way it works, not with secured debts. Unless you can prove to a judge that you have the means to pay the usual mortgage payments PLUS clear any arrears over the life of the mortgage, a judge will grant repossession (this is the so-called Norgan test, after this case http://en.wikipedia.org/wiki/Cheltenham_%26_Gloucester_Building_Society_v_Norgan). The fact that you dont live in it will make the lender MORE inclined to repossess quicker, as it means that you wont be able to get any help from the benefits system if you are in difficulties and also it measn they won't have to evict a mum and kids.
"so if that hasn't worked and the property is sold they would look at the most likely way to recover any losses, which may well be bankruptcy" that isn't right either. It is not in the lenders interest to make you bankrupt if there has been a repossession ending with a large shortfall. If they make you bankrupt they will have to pay your bankruptcy fees and likely end up with nothing. Instead they would prefer to keep checking if your circumstances have improved so you can start repaying the shortfall - and for a shorfall on a secured debt this is not "statute barred" until after 12 years, not the usual 6. So you end up with a huge millstone round your neck and it may well at that point be worth you chossing to go bankrupt.
If you don't have much by way of unsecured debts and the shortfall would probably be small, then I agree with the others that you should try to sell the property yourself - even though its a hassle you do not need, you are likely to get a better price than the the lender would after a repossession.
But if the shortfall is going to be large or you have a lot of other debt, then bankruptcy may be the best way for you to get a fresh financial start.
Lots of incorrect advice 34DD!
Mortgage debts lapse after 12 years of no contact.
It's not essential to include all
Debts in bankruptcy as - unlike for a DRO - they are all written off even if you forget to include one.
Thanks for all your replies & good advise. (Sorry late replying - did a lengthy post the other day and broadband cut out!)
Kids are back to school tomorrow so will be trying to get to CAB as soon as possible.
bimbabirba thanks for your reply. After much thought last week I think you are right, I should try my very best to sell it quickly and get shut once and for all. Can't bear the thought of renting it out again and having that 'connection' to the ex whilst he does sod all
I do worry how the hell I'll cover the mortgage & my rent at same time but hopefully CAB will give me some good advise & of course will be speaking to mortgage co soon too. A payment break would be fantastic.
It's not been on a Buy To Let, mortgage company were quite happy to keep it on interest only and they gave full permission to rent it out etc.
Thanks again everyone, feels good to share
I'll update with how I get on with the CAB.
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