Northern Rock, Repo shortfall, what happens next?

[angelrainbow]

Hi there. I was reposessed in July and I'm pretty sure I recall my IP stating it was more favourable to me in terms of IVA approval to have been repo'd as opposed to handing the keys back voluntarily...

I guess each individual situation is different but I just thought I would mention it - perhaps it is a question you could ask of an expert or whoever you decide will act for you.

[MelanieGiles]

I cannot see the difference to be frank. In either scenario there is the loss of a property, and most likely a shortfall to the secured lender(s). Repossession is far more costly, which will eat into any available equity and likely result in a higher shortfall, so I struggle to understand why that option could be deemed to be more favourable to anyone.

[ianmillington]

I agree with Melanie - repossession will inevitably produce a worse overall result for the creditors, so I can't see how that would help sell an IVA. If bankruptcy is the solution, and the priority is to get housed then I believe many councils will give higher priority to those who have been evicted than those who has simply handed the keys back.

Ian

[itshouldhavebeenme]

Hi again everyone,

There are some really helpful comments here and I really appreciate everyone's time, effort and input.

We have had some slightly more positive news this morning in that we have had an interest in our property from a prospective buyer, they have been round for a second viewing and we get the feeling they may be ready to put in an offer, we have only recently put our house on the market, so we are not holding my breath, but anyway, lets think positive!!

Assuming that an offer is made, it will almost certainly be far less than the asking price due to the current buyers market, if this were the case and it was enough to at least pay off the NR debt, but NOT enough to settle the secured loan debt, what would happen? can the sale still proceed on this basis, or CAN the secured loan company block the sale if there is a shortfall?

We would just like to be sure about this as we would obviously like to accept, if a sensible offer was made, this would be far better for everyone to offload the house in this way as opposed to forced sale/repossession, as we would be able to crystalize our situation far more quickly and get on with an IVA knowing exactly what our debt would be.

Your advice would be appreciated as always...

M

[jane.l]

This is what happened to us, we found a buyer, and we could have paid off all the mortagage and about one third of the secured loan, we originally thought, if this was allowed, we would look into an IVA for the shortfall, but the secured loan company blocked the sale and so we had no option really but bankruptcy, the house has now sold for nearly £40,000 less than the price we had with our cash buyer! so not enough now to even pay NR[:0]

I am not sure now as the property climate is very diferent from 18 months ago, maybe the secured loan companies are more amenable to this now?

[MelanieGiles]

The secured loan company could block the sale, but would be silly to do so if the sale is recommended by a professional firm of valuers. The trick is to keep them as informed as you possibly can with regard to progress. Assuming that Northern Rock are also the secured lenders, you will find that they will look at all offers sensibly. It is important to clear grounds with them initially, as you don't want to be wasting your time and that of prospective purchasers if you cannot deliver what Northern Rock are looking for.

[ianmillington]

I think you will now need to be talking to the secured lender who will obviously need to release their charge if title is to be passed to the purchaser. Either they will need to give consent to the sale or as mortgagee in possession. Hopefully they may see sense and do the deal one way or the other which will at least enable you to tick one of the boxes, and a big one at that.