we feel completely trapped now!

[jane.l]

Ours seems a complex case. We took out 120% mortgage in 2004 and also have a secured loan, as well as other debts. We decided to sell our house and buy a cheaper one to get our monthly outgoings down. We have a cash buyer who is pushing things along, however, the secured loan people will not transfer the loan to the new cheaper property without us paying £10000, which we obviously have not got, so they said "well, we will not allow you to sell the property"

I have applied for an IVA and was told that the secured loan company may be willing to allow the sale to go ahead as it is in their interest, but the legal charge will still remain on the house, so obviously our buyer will not buy the house with a charge on, (nobody in their right mind would, or so our solicitor implied) so obviously we feel completely trapped now!

Also, because our solicitor has now found out about our financial problems, they are demanding £2000 immediately before they would proceed with the sale, if it goes ahead! We had hoped to pay this bill from the sale of the house, but now do not know which way to turn. we have signed up for a 6 month tenancy on a private rented house to start in April as we thought our house was being sold.

My dilemma is: 1)do we wait and see if the house CAN be sold? 2)do we wait for the house to be repossesed and (hopefully) apply for council housing? and what about the short term tenancy we have signed up for?? This is the most stressful time for us, we have 3 children, one is doing her Alevels and everything has just got tooo much. Hopefully we will hear from the IVA people soon regarding our proposal

[MelanieGiles]

Hi jane and welcome to the forum

I am afraid that you are caught in the negative equity trap caused by irresponsible secured lending. Who on earth would lend 120% on a mortgage and then lend behind that on a secured basis? Bizarre!

If the secured loan company will not agree to move the loan to the cheaper property, and I can understand why as they will have little or no security, then your solicitor cannot give good title as they will not agree to remove their charge.

Your solicitor is probably best placed to advise here, but practically what I would do is sit tight in the property and try to continue to pay the first mortgage. In the event that the secured loan company take possession proceedings against you, then this will likely result in a sale of the property leaving a unsecured shortfall which will have to be taken into account within your proposed IVA.

In the meantime, you have the benefit of only paying one mortgage - which may equate to the rent you were intending to pay on the rented property. Can you afford to pay the current mortgage and make some form of contribution to the secured lender, whilst also paying IVA payments?

In the event that the house is repossessed and you are eventually evicted, you will probably stand a better chance of getting assisted housing, than if you just handed over the keys on a voluntary basis - but do speak to your local authority about this directly.

Do make sure that you write to the secured loan company to explain the steps you are taking, and invite them to give you any advice they can about the way forward. Keep copies of all letters and other correspondence with them.

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

[jane.l]

Cannot believe this is happening, we have (at the moment) an excellent credit score and have always tried to pay debts but to go from this to nothing, things have never been so bad, we only ever wanted a house in a nice area for our kids and its not as if its a huge mansion, its just a terraced house and now we are to lose everything and all we've tried to work for, the debts have just built up because we tried over the past 18 years to get our monthly outgoings down, by taking on a secured loan, as well as other things, we have had to manage on 1 wage for years, that how we got in to this mess

there just seems no point to anything anymore, if it were for the kids, I'd just down all me tablets and have done with it. Wish to god, I could turn the clock back and do things differently,

not too happy with the IVA people, I have spoken to different people every time and they got the figures wrong for our cars I gave them, when I told them about our house selling situation, they suggested handing the keys back!!! Now I am not convinced the IVA is feasible, There is no-one to turn to for advice who would be on our side, everyone is just out for something for themselves!

[MelanieGiles]

Jane

I don't necessarily agree with your comments in your last paragraph. I can only speak for myself, but we really do try to find a solution for every problem that is presented to us.

Your problem is that you are completely overgeared on your secured borrowings, and caught in the trap of being unable to downsize due to the attitude of your secured lender. Personally, I believe that all mortgages in excess of 95% loan to value should be banned, and that secured loans could only be granted and based upon professional valuations of properties - and again not granted for more than 95% LTV. You can see the dangers of borrowing in excess of the property value, and others should beware falling into this trap.

If you can afford to go into a private rental, why not just move away from the house and let the mortgage and secured loan company fight amongst themselves. This whole situation if proving to be far to stressful for you. Can I ask how you were going to fund the deposit on your new property? And would you still be able to buy the new property if you walked away from the old one?

Jane, please focus on the fact that there are more important things than debt, and that your immediate priority is securing a home for your family. Once this is all done, come back to us and we will see if an IVA is then a viable way forward for you. At the moment, it is difficult to appraise your case, and that is probably why you are getting "woolly" advice from your IP.

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

[Storm]

Melanie gave some good advice.......

It is very unlikely that the sale of the property will complete. Not sure what you meant by transfering the secured loan to a smaller property ?? as you will be moving to private rented property there will be nothing for the secured lender to secure to ?

I would never advocate handing the keys back as generally the auction route is used and the subsequent shortfall increases significantly.

Both your current first mortgage lender and your secured loan lender may become significant unsecured creditors and therefore will have an impact on any potential IVA.

It may be worth considering all the options including bankrupcy.

[jane.l]

I meant our original plan was to move to a cheaper house and transfer the secured loan (which is with Picture) and carry on paying as we are now, but with a cheaper mortgage, (we are with Northern Rock)
If this plan went ahead, we would have about £4000 out of the sale of the house that we were going to use for moving costs and deposit.

The problems have started now we have a buyer, the secured loan company (Picture) will not transfer the secured loan so thats why we have realised that selling the house is not an option and have looked for a rental property. Probably repossession is the only way and then if the IVA is not accepted, then we will look at bankruptcy

[neverending]

Jane
How much is your house selling for and how much is your total secured loan and mortgage.
Regards

[jane.l]

Our Northern Rock mortgage settlement figure is for £113,500 and the house is selling for £117,500, although because of the other Picture loan, which is secured and they will not transfer it or allow the house to sell, I really don't see any way forward now, they will not remove the charge. The house we did plan on buying was £98000, we have alreday told them we cannot go ahead with the sale. We have not said anything to our buyer yet but I assume it will all come out soon, which is difficult as he lives at the bottom of the street and we have to see him every day[:-(]

[MelanieGiles]

How much is your Picture Loan, Jane? I am amazed that this was granted to you on a secured basis when you have so little equity.

I cannot understand the attitude of Picture not letting you sell. If you stop paying your Northern Rock mortgage, then there will be no equity left and they will get absolutely nothing. I think that you need to get your lawyer on to this and talk some sense into them. If you were to move into the smaller property, could you pay a smaller mortgage, the secured loan and IVA contributions? If the answer to this is yes, then your IP should also be lobbying Picture to see some sense.

Have you also checked that the Northern Rock redemption figure does not include any unsecured element.

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

[Storm]

Picture / FirstPlus / Welcome will all do 125% L2V which means you are in trouble when you try and sell the property within 5 years of taking the loan. It also means you are unlikely to settle the loan early because to settle would mean finding a lump of money.

From reading your earlier post the issue of your lawyer wanting money on account is also going to cause a problem.

Maybe bankrupcy is a solution ??

[jane.l]

I've hardly slept this week! Been to the Citizen's Advice today, 2 hours I was in there and no real constructive advice! They have never come across my situation before. They also said an IVA was the LAST thing I should have gone for and was badly advised!! I only wanted to know where I stood with regards getting council housing and feel like I have been told off by the headmaster! not very helpful!

Anyway, the best advice they could offer was to stay till house is repossessed and then apply to council as homeless and they would probably put us in B&B , that is precisely what I want to avoid with 3 children and oldest doing her A-Levels! Our only option is to go into private rented accomation and let NR & Picture fight for the house amongst themselves. My only HUGE worry about this is, if our IVA proposal is rejected and we have to go for bankruptcy, would our private landlord evict us? and what then?????????? cardboard box city[:-(]

[MelanieGiles]

Jane

I cannot comment upon whether you were badly advised to propose an IVA, as I do not know how much you owe or what you were offering.

The CAB advice is not disimilar to that I gave you in an earlier post - but apart from telling you an IVA was inappropriate, they don't seem to have given you any form of advice with regard to your unsecured creditors.

An IVA is unlikely to work for you at the moment, given the uncertaintly regarding your financial position, but I certainly would not write it off as an option. Your housing situation is the most important at the moment, and for that you really need legal advice.

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

[jane.l]

thanks for all advice, I thought the CAB would advise re: housing but at the moment, there just seems to be no-one to turn to for impartial advice, our solicitor who was selling our house does not even know what an IVA is! I just feel so helpless, we are probably going to pursue this private rented house, just so that we feel "safe" (kind of) for a while! I am just so scared of being on the streets, if it were just me, I would not care, but its the children I am scared for

I think, assuming we could sell the house, our debts would total £59000, and the amount the IVA suggested to offer was £645 per month, but that was before I found a rented house and it was the only one in my area to accept pets so we are, hopefully, taking it, anyway the rent is higher than expected so at the moment, the IVA people are re-jigging the figures, BUT now with this hassle with the house sale, we are not sure what is happening and even if the IVA is feasible!

[MelanieGiles]

Jane

You must put the IVA on hold while you sort out the other things. You will be proposing something which is destined to fail, as you cannot accurately predict the Picture shortfall which could end up being your largest creditor.

Try a DMP for the next few months until you get sorted out. At least this should keep creditors at bay for a while.

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

[jane.l]

how do I do that? just write to all creditors explaining things are offering to pay less for a while? its just the mortgage and secured loan we are stuck with if we cannot sell the house, we have no option but to not pay and let it get repossessed? I am just confused, wish I could just turn clock back!