Early redemption figures in bankruptcy

[zoe]

Hi All
Just wondering if someone can help!
I have early redemption charges of £5200 on my mortgage valid for another 4 years. When calculating the equity the case clerk will not take these into account. Is this normal? the way i see it is if we allowed them to sell the house rather than purchase the equity they will have to pay these so what is the difference?
Your help would be appreciated!
Thanks guys
Zoe

Zoe
x
Keep your chin up - everything happens for a reason!
View my blog http://zoes.blogs.iva.co.uk/

[Adam Davies]

Hi Zoe
I think that this info is correct,as strange as it seems.
I suppose that the thinking behind it is that you could buy the interest back with the early redemption clause added to the mortgage and then once it expires you would be quids in.Whereas by not taking the early redemption fee into account you are no worse or better of when the penalty clause is finished
Regards


Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
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[zoe]

Hi Andy
It is confusing me - as they would be worse off if i told them to have the house!!!??
The figure is valid for well after the 3 years for them to sell my house?
this is also taken from their website
What is meant by my 'beneficial interest' in my home?

This is your interest in the proceeds of sale of the property. It is different from the legal title to the property, which is held by the owner.

If you are the sole owner, the beneficial interest is the whole value of the property.

If there are joint owners, the beneficial interest is usually an equal share of the value.

(If there are any amounts owed on mortgages or other loans secured on the home, these will be repaid first from any proceeds of the sale. Your beneficial interest is calculated after deducting these amounts.)

Zoe
x
Keep your chin up - everything happens for a reason!
View my blog http://zoes.blogs.iva.co.uk/

[Adam Davies]

Hi
I understand what you are saying and it doesn't make sense when you look at it from that perspective.
However what about this scenario
Two people go bankrupt at the same time.
Both have houses worth 150k and outstanding mortgages of 140k.
One has a early redemption fee of 5k lasting 1 year
If the ERC was taken into consideration one would pay 5k and the other 10k.
Both get discharged at the same time
Is it fair that one has paid 5k more than the other to keep their house ?
I'm not saying it's right Zoe,just trying to get my head around it
Regards


Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[zoe]

Hi Andy
I can see your point in that scenario, however mine is for 4 more years, if the OR gave it the max time to sell my house, (3years after br date) they would still have to pay it??!!!!
I have put a query to them to see what they say
Zo
x

Zoe
x
Keep your chin up - everything happens for a reason!
View my blog http://zoes.blogs.iva.co.uk/

[Adam Davies]

Hi
Good luck

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[MelanieGiles]

Hi Zoe - or hello stranger!!!

You make a very good point, and personally I do not understand why early redemption figures are not taken into account for the purposes of equity calculation.

You could be bullish and dig in here, with the OR knowing that they have to deal with this issue within the 3 year period, however you run the risk of the property going up in value and eventually having to pay more.

Interestingly, were the OR to press for possession and sale proceedings, the redemption penalty would then have to be taken into account. I suggest that you negotiate with the OR on the grounds of commercial sense and see where you get to.

And do keep us informed!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

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