House repossession!

[Justthetwothankyou]

Hi
My friend had her home repossessed in April, it's still on the market, the EA had it on at 10k below at first listing and recently just dropped it another 10k.
She's starting to panic but won't seek help, (we've all begged her).
I know nothing about repossession except what I've read on the internet and can't really get definitive answers. She's sofa surfing at the moment and panicking that if the house sale doesn't cover her debt to the bank they'll begin to garnish her wages.
I know that she needs to see someone, even just popping into citizen's advice, but all she does is panic and I'm afraid she's going to make herself ill with the stress!

Does anyone on Mumsnet have a general idea what happens and what will be expected of her?
She's currently working, above minimum wage (she's been there for 6yrs and she has worked her way up with more opportunity of promotion in a yr or so), has no dependants and a car on finance.
I also know that she's not been paying council tax and utilities over a 2yr period. She doesn't have MH issues, it's just been a case of having left home and no real understanding of how to budget etc. Her parent's would happily have her back but she hasn't even told them, she's not really told anyone until it became too late to act.
Thanks

If the sale price doesn’t cover her debt she’s still liable for the remainder. She can declare herself bankrupt to get out of it but obviously that’s not ideal. Sometimes the bank will make a deal to write off part of the debt if she agrees to a payment plan for the rest. I think garnishing her wages would be an absolute last resort if she refuses to pay.

Thanks AriadneesWeb, I'm going to try and get her to go to citizens advice with all her paperwork and see if they can signpost or help approximately.
I will tell her about the garnishing of wages being a last resort.
I think she assumed once the house was taken she'd be back to square one (albeit the debt with council & arrears with utilities).

Unless the debt is small she’s best off going bankrupt. Having a repossessed property will destroy her credit rating anyway so it can’t get much worse.

Although her credit rating is already probably pretty terrible, it might be worth trying to get into a rental now before further defaults/ bankruptcies are registered.

I don’t think the sales price has anything to do with her anymore- the bank will be calling the shots. She just has to wait really.

I’d contact the bank personally and be upfront and be prepared to enter into a payment plan. As pp says they will write off part of the debt and agree an arrangement for the remainder based on what she can afford. I absolutely wouldn’t advise bankruptcy of course that’s worse.

How is it worse? Her credit rating will be as bad as a bankruptcy right now. Don’t you think it’s stupid for someone with no money to agree to pay back a huge debt (it could be 30.50,100,200 grand!) for an asset she no longer owns?

Get professional advice OP, I can be certain she’ll be offered bankruptcy as a preferable option. Otherwise she’ll spend many years paying them back and she’s already lost the house.

Anyway no point contacting the bank until the property is sold. They’ll contact you anyway

As PP have already said, she'll still be liable for any difference between the amount remaining on the mortgage and the amount the property sells for.

Also, I would be concerned about the non-payment of Council Tax because I think Councils act a lot faster than the mortgage companies to get the debt repaid. If she hasn't paid that for 2 years has she already got a CCJ from that?

Yes as above the council will act fast for unpaid council tax and there may already be a CCJ for that.
So passthecherrycoke do you think the bank should write off a debt that she willingly took on and is in contract to pay because she’s given up the house? How immoral. She took out a contract to pay the money she borrowed and she should fulfil that obligation. There are far more implications to bankruptcy that would be worse for her than ‘just’ a repossession.
I think you need to get some legal advice and be upfront about your responsibilities. (I’m not saying you aren’t by the way, I can tell you are worried and concerned and that’s the reason you’re seeking advice!) the banks can tell the genuine people from those that had no intention of paying from the outset. Be honest with them and I’m sure they’ll be understanding with you. Wish you the best of luck.

That’s what bankruptcy is @madasamarchhare. It’s immoral NOT to have a system that allows people relief from unrealistic debt repayment.

Also not sure you’ve read the OP properly- it’s her friend, not her. And also what’s the point in phoning the bank? The house Has already been repossessed, but not sold on. Therefore the the bank are the owners and until it’s sold they won’t know what the friends outstanding debt is.

I agree the council tax is a priority though

Thanks all, just read all your responses.
We've managed to get her to make an appointment with Citizen's Advice for next week, so hopefully she can get some professional support and see the a light at the end of this tunnel.
I've made the point to her that she needs to take as much paperwork as she can get her hands.