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Original poster

Bankruptcy and houses..............

20 replies

FAQinglovely · 05/05/2009 13:34

what happens to your house if you are made bankrupt - but the amount outstanding on the mortage+arrears is more than the house would actually sell for?

It's on option DH is vaguely looking at - but as it stands at the moment there's absolutely no way the house will make any money at all - if it was to sell today he'd be lucky I think it it was under 5 figures the amount that he'd still owe the bank.....

OP posts:

stickylittlefingers · 05/05/2009 13:59

the trustee in bankruptcy will sell all your husband's assets (bar some "essentials" you are allowed to keep) to try and repay his creditors. The trustee may try and keep the house for a while to see if the value goes up so as to be able to give the creditors a better divident, but that is up to him/her

Original poster

FAQinglovely · 05/05/2009 14:02

lol - what assets would those be? His table? His 2 tub chairs he's just been given? the sofa bed the DS's sleep on when they stay with him?

He doesn't have any assets - apart from the house which is negative equity

OP posts:

Iklboo · 05/05/2009 14:03

It depends on how he is made bankrupt. If the total assets are valued under a certain amount (not sure what it is these days) after all the debts are taken into consideration it will be dealt with either by a Trustee or the Official Receiver. ORs less likely to sell all assets and they operate a scheme where, if the property is in negative equity, a third party can buy the OR's interest in the property.
His best bet is contact your nearest ORs office and ask for copy 'what happens when I am made bankrupt' leaftlet. It's probably available online too

Iklboo · 05/05/2009 14:06

And ALL his debts are taken into consideration - mortgage, arrears, loans, credit cards & agreements, arrears of council tax, some utility bills.
He MAY have his bank account stopped or frozen but the ORs office have a list of banks which allow you to have an account as long as it has no overdraft facility or cheque book.

Original poster

FAQinglovely · 05/05/2009 14:10

well with all the debts - including mortgage+arrears there's no chance that his "asset" comes anywhere close to the amount.

OP posts:

Iklboo · 05/05/2009 14:20

Try looking here for help & advice:

insolvency service website

Original poster

FAQinglovely · 05/05/2009 14:22

thanks - will have a look there later - and get him to have a look when he's over next as well.

OP posts:

LauriefairycakeeatsCupid · 05/05/2009 14:23

can you afford the mortgage, cos if so you may keep the house

this website for answers (the debt forum part)

www.debtquestions.co.uk

Original poster

FAQinglovely · 05/05/2009 14:24

no I can't afford the mortgage - I wouldn't have moved into private rented if I could have done.

OP posts:

LauriefairycakeeatsCupid · 05/05/2009 14:30

sorry, I thought you may have still been living there.

You have nothing to lose then. The Official Receiver is not interested in common household items only items of value, cars/boats/fancy gadgets/houses.

That website has a full section on the forum about bankruptcy and will answer all your questions for going through the process

good luck

Original poster

FAQinglovely · 05/05/2009 14:33

I know it's items of value - I'm trying to find out what happens to the items of value if they're not actually going to make them any money, and if the asset is sold and doesn't even cover the amount owing on the mortgage, let alone the rest of the debts. Been looking through loads of websites the last few hours and found nothing.

And I have a lot to lose - DH and I are wanting to move back in together - it may be him that's considering going bankrupt - but that affects me in the long (and short) term too

OP posts:

Iklboo · 05/05/2009 14:35

Bankruptcy would only really affect you if the debts are jointly & severally liable (eg in joint names) but it might affect your credit rating if you're living together. Although you can have something put on your credit listing that states the debts are nothing to do with you nad therefore should not be counted towards a credit check in your name

Original poster

FAQinglovely · 05/05/2009 14:37

there's no joint debts - all in his name - and don't ask me how - but somehow after 8yrs of living together (in the UK) when we separate last march my credit rating was unaffected and he wasn't even mentioned on it - I was all set to disconsolate myself from him financially and discovered I didn't have to!

OP posts:

memoo · 05/05/2009 14:43

FAQ, if they take the house they chances are they will just sell it for whatever they can get for it. If it doesn't cover the debt they will still chase you husband for the remaining amount.

3 years after being made bankrupt my friend is still being chased by the morgage company for the remaining balance because her debt was about 80K and they sold the house for only 58K

afaik they have about 7 years to try and recover the debt

Original poster

FAQinglovely · 05/05/2009 14:50

so how does that work then if they're made bankrupt and the house is sold for less than what's owing on it and then they still end up owing ££££££'s of money - which they can't repay so they end up going bankrupt again???

OP posts:

LauriefairycakeeatsCupid · 05/05/2009 15:00

er no.....they are not allowed to chase you after you have been made bankrupt, all debts are written off.

There are a few mortgages from the early 90's where they signed something to say they could chase them but it certainly doesn't apply now.

They will only take items of value but the OR will also tell you when they are to be sold at auction for example - my friend bought her diamond ring back from the auction house for £25 when they sold it.

They cannot take your stuff and they will most likely not come round at all providing he writes nothing to declare on the right part of the form

LauriefairycakeeatsCupid · 05/05/2009 15:02

Sorry, wasn't clear - they can chase you for up to 6 years but they cannot legally enforce it after you have been made bankrupt. They cannot take you to court for it or take any of your stuff away.

So yes they can write you letters about a shortfall but they can't do anything.

So you have to ignore them.

memoo · 05/05/2009 15:02

sorry FAQ i'm getting myself confuesed. Her house was repossed a year before she got made bankrupt so wasn't part of the bank ruptcy order. So when it had been sold by mortgage lender she stilled owed them money

Just ignore me my brain is fuddled today

stickylittlefingers · 05/05/2009 16:24

the whole point of bankruptcy is clean sheet and start again. Obviously it's not completely clean because (as you'll be aware) you're often asked whether you've been declared bankrupt when applying for credit etc, and there are certain jobs you cannot do. But the basic idea is - you can't pay your debts, the trustee takes the assets worth taking, you wait to be discharged and then it's done. What your assets actually add up to is not the point.

Fizzylemonade · 05/05/2009 16:55

Going bankrupt has big implications for credit in the long run, I used to work for an electricity company and in Council Tax and they are classed as "credit" accounts.

After bankruptcy you are very unlikely to have an account in your husband's name, it would solely be in yours if you are living back together.

We were notified from the courts about who had gone bankrupt, so say Mr X had gone bankrupt but the account was in the name of Mr and Mrs X, we would close the joint account from the date of bankruptcy, write "bnkrpt" after Mr X's name, then open the new account in Mrs X sole name.

If the direct debit was in sole name of Mrs we would continue with that, if it was in joint, it would be closed. We wouldn't offer a credit bill where you use electric for 3 months and then are billed, we would want either direct debit or prepayment meter.

If you rent somewhere, you might have to have a guarentor sign the tenancy agreement. Just worth a thought, please seek expert advice about this.

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