The secured home loan trap!

[Octagon]

Hello everyone. I have a question regarding a secured loan on my property.

I am currently seperated from my wife living in the marital home alone. My wife and I are co-signitories to a secured loan of around £52,000. The mortgage is a joint one but my wife is happy to transfer the equity to me as she wants nothing more to do with the flat or my assets. If I clear the debt owed in both our names she is happy to cooperate.

Currently I think there is at most 40K equity in the flat leaving after fees and various expenses form the sale around a 15K shortfall.

I would like to sell the flat and pay off the secured loan so that I could start again without going BR. An IVA wont help as the homeloan is secured.

I have around 25K of unsecured loans / credit which I could deal with no problem if it wasnt for the secured loan payments and the mortgage which I am paying for on my own.

I would like to know the experts thoughts on if I should be approaching the secure loan creditor with an offer to settle for the total equity I could get from the sale of the property. And the best way to go about negotiating this.

If I cant do that it seems my only route would be BR as I cant raise the extra cash to cover the difference.

Looking forward to your advice.

[facingittogether]

hi - just wanted to say welcome and you have come to a great place for support and advice!

i am not na expert but i am sure one will be along shortly - hang on in there!

good luck!


barb x

[ianmillington]

Hi Octagon and welcome to the forum.

What you are attempting to do is likely to be very difficult to achieve. I think that, firstly, it is important to recognise that there is no equity in the property, there is negative equity, and both you and your wife will be jointly and severally liable for the shortfall on the secured loan.

A novation of the loan into your name might not be out of the question, if it coincides with a transfer of the property into your name and there is the intention of continuing to service the loan. If, however, it there is going to be a shortfall it is highly unlikely they will release your wife from the shortfall.

As regards an offer to the loan creditor, well you can try but they are not noted for their humanity. My guess is that they will take what is on offer whilst retaining their rights to pursue you for the balance.

Ian

[Octagon]

Thanks for the quick reply Ian.

I suppose in that case initiating BR would seem to be the only realistic way forward. Am I right in thinking that a joint bankruptcy petition would be the next step as the secured loan and mortgage is in both our names?

I feel like im moving toward the inevitble ;-(

[ianmillington]

I wouldn't suggest that at this stage - it's premature. Whether Bankruptcy is the right option depends on a number of factors, and not just your property situation.

You need to have a confidential chat with an IP about the various options available to you, and your wife, if, as I read it, you are both singing from the same hymn-sheet.

Ian

[MelanieGiles]

I know a great firm of solicitors who are currently specialising in negotiating reduced settlements with secured lenders and have a good success rate. Happy to pass their details on if you drop me an e-mail to the website.

[ianmillington]

That's definitely worth a shot!

[Octagon]

Many thanks for your replies.

Melanie I have contacted you via your website.

I really feel for everyone out there who has been where I am now on the verge of making a decision about what kind of future they want.

For me the spiral of debt / consolidation / debt has been a part of my life since I was 18.

I feel in some ways coping with it for this long has in itself given me some valuable life skills and whatever the outcome I know I will be stronger person for it.

Thanks everyone, Ill post back when I have some news to share.

[ianmillington]

Good luck at your interview Jane!

[Viki.W]

Oh Jane, Good luck for your interview, you sound such a lovely person who has really been through hell so I'm sure you'll ace it. Let us know. viki X

[facingittogether]

good luck from me too jane with your interview!

let us know how you get on!

barb x