how can i deal with the mortgage shortfall

[markb]

Hi
After years of always being able to pay my debts I find myself in a dilemma.
I have a second house which the lender has refused to negotiate on the mortgage rates and payments have increased to £1300 per month which I can not afford, the propertry is also in negative equity.

I have discussed with the lender to hand possession back to them and therefore allow them to sell the property.

My question is how can i deal with the mortgage shortfall thereafter, I have a small bank loan of approximately £5k and a credit card balance of £1-2k, can I look at an IVA and do I have to wait for the lender to tell me the shortfall amount befor looking to start an IVA.

any help you can give would be very much appreciated as I am starting to feel very stressed and concerned with the lack of control I have with the situation

Thanks

[Adam Davies]

Hi
Do you own your own house with equity in it ?
How much do you think that the shortfall will be ?
Regards

[kallis3]

Hi and welcome.

Once the house is sold, any shortfall becomes unsecured. This can be included in an IVA.

I am not sure if you have to wait for it to be sold before looking at an IVA, but one of the technical experts will be along to advise shortly.

[markb]

Hi

Yeah I own my own property mortgage is approx £108,000 value I would think is about £124,000.

No idea yet on the shortfall, But i rang a local estate agent and he advised that we would be about 30k in negative equity (apparently local developers are getting rid of stock at very low prices) so I expect the shortfall to be at least £50k, its so frustrating as I cant seem to find anyway around it and the mortgage lenders refuse to reduce my rate.

[Adam Davies]

Hi Mark
If it is that sort of figure and your other debts amount to 7k then you may have to negotiate directly with the lender over the shortfall rather than an IVA.
Melanie or David are better placed to advise on this so please wait for their response
Regards

[markb]

Thanks for the responses.

My only problem is that the lender dont seem intrested in negotiating with me, I have tried on several occassions to sort out selling the property myself and they dont seem willing, I just dont want to end up bankrupt and loosing my own property.

Days like this you wish you could turn back the clock

[kallis3]

I hadn't given a thought about the mortgage people being the main creditor, sorry!

I would have thought though, that it would be in their best interests to help you out as they will get next to nothing if you go bankrupt.

[MelanieGiles]

Why not ask them to take a charge over your current property? It would seem such a shame to have to enter a formal insolvency when your other debts are quite small, but with that short of shortfall it will take a long time to pay it back, and if they charge interest on an ongoing basis you may find that all you are doing is covering that.

Is this a buy to let property which has just gone wrong for you, or are there other circumstances which have led to your current position?

[markb]

Its pretty much a buy to let that went wrong, plus the fact that I lost my job approximately 2 years ago and spent the last 2 years in and out of court trying to get it resolved.

I just find it hard to deal with the fact that i could loose so much money, or end up spending hundreds of pounds a month trying to clear the debt off. I sometimes wonder if bankruptcy would be easier, at least it would give me a fresh start.

[MelanieGiles]

It may be worth looking into - but you are obviously aware that this will affect the equity in the property you are living in which would vest in a Trustee?

[markb]

is it possible in bankruptcy for a relative to buy our intrest in the property? for instance if the equity was £15k could a relative buy that for around £10k to save the property being sold.

Would I still need to make monthly payments under a bankruptcy.

The reason I say this might be another option is beacuse I was told that under an IVA all of my free income (after food and household bills etc would be taken from me) for instance I would not have any funds to go away on holiday etc during the 5 years.

I know it might sound petty but I dont feel I could spend the next 5 years not being able to live my life because of one error, and numerous factors outside my control

[kallis3]

Hi,

I think that someone can buy the beneficial interest in your property if you go br. An expert will advise on that.

In an IVA, you will be allowed to keep some of your income. You will have to live to a budget, but people do manage to save and go on holiday. You are not expected to not have a life during this time.

With BR, you will usually be expected to make payments for three years. Again, it goes on your disposable income.

[MelanieGiles]

Perhaps being in an IVA is not as bad as it first seems, but if you are intent on bankruptcy it is possible for your relatives to acquire your interest, but the Trustee will not be giving that away and will expect full value to be offered.

[David Mond]

I would like your full details of income and household expenditure for you and your partner/wife.This might indicate what DI you may have. An IVA might be the appropriate vehicle by bringing in all creditors and giving them dividend prospects when re-mortgaging your 85% equitable interest (subject to LTV calculations) in the final year of your IVA. Seek free independent advice by visiting www.iva.com and select from reviews a practitioner. Once you have decided from advice the most appropriate solution then get the buy to sell property sold and crystalise the loss which will be added to your unsecured creditors in an IVA if that solution is sustainable.

[markb]

I more than happy to provide details of our income and expenditure as a rough guide our household income is approx - £2100 per month and our total outogings inc food, mortgage household bills etc would amount to about £1500, again I can provide a breakdown if required.

I dont really want to go bankrupt but sometimes feel that the lenders just dont want to help the situation and it becomes very one sided, I know we took on the agreement but times have changed and a lot of options that were available 2 years ago are no longer there.