have been told 2 different things about BR

[brian.m]

Hi,
My Wife and I our going through process off looking at IVA's and BR, but I have been told 2 different things about BR that I would like to try and clear up
Our house is worth £315,000, our mortgage is £220,000 and a secured loan is £120,000 is we became bankrupt, natwest would get fisrt dibs on £220,000 and whatever was left would go to firstplus but they would be short by £25,000, would this some then be added to our £110,000 worth of unsecured debt and cleared via the BR or would it be a separate debt that Firstplus would chase us for

Many thanks

[go_4_broke]

Hi Brian

I don't think going either into an IVA or BR would affect your house necessarily as there is no equity to be realised.

In fact Firstplus would probably actively prevent a sale as they are presumably relying on an increase in the property value to repay the loan.

If you were able to sell the house or get out of it in some way then certainly I think Firstplus would take the hit ultimately as they will have 2nd Charge, and they will then pursue you for the difference which would be unsecured.

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[jane.l]

We are in exactly the same situation, We have a Together mortgage from Northern Rock, secured is £98000, unsecured about £15,000, we also have secured loan of £35000 with Picture, the house is worth £117.500. We wanted to sell and buy a cheaper house but Picture refused to transfer the loan without us settling £10,000, we are looking into an IVA and are trying to get Picture to "lift" the second charge and allow a sale and put the shortfall of money in to the IVA "pot". At the moment, they are saying they are refusing to allow the sale to go through, if they persist in this stance, the only option I can see is to let it get repossesed and Northern Rock & Picture can fight it out amongst themselves! We may go to bankcuptcy as our debt is rising and I am not sure an IVA is feasible To top it all, the buyer for our house said yesterday that he wants a few thousand knocking off the asking price, he thinks we are near to completion and does not know of our problems!!! IF we accepted the lower offer, it just increases our debt and the IVA proposal is stretched to the max as it as so I think bankruptcy is looking like the only option

[MelanieGiles]

No - the remaining unsecured element of the First Plus debt would be treated as a debt within the bankruptcy, if your house were to be sold whilst you were subject to such proceedings.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[go_4_broke]

Yes, I should perhaps have added that in the bankruptcy it would be treated the same as any other unsecured debt and 'cleared' by the BR. But thats assuming you can get that far.

The main point is (and I'm sure Melanie will correct me if I'm wrong) that you should not assume that bankruptcy would cause an automatic sale of your house.

So you may well be stuck with the Firstplus loan during and after your bankruptcy, if that's the way you go.

You could regard this as a plus point if you were keen on keeping your house, but if not it causes a proper dogs dinner, as poor Jane above has found out !

-Best

Please view my blog at www.go4broke.blogs.iva.co.uk

'6 years sticking my head into the Lion's mouth of debt !'

[MelanieGiles]

That's absolutely correct - so long as you can afford to maintain the payments to your mortgage and secured loan, then your house will not have to be sold.

It would be a good idea to transfer the beneficial interest to a family member, just in case it increases in value over the three year period in which a Trustee can realise his interest in the property. This can usually be arranged for the sum of £1 plus legal costs, and I would strongly recommend that this be done.

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

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk