2nd Mortgage Question

[TomThumb]

I need some advice folks, more related to Bankruptcy I guess. We are 12 months into an IVA and struggling, my wife is going to give up work due to the pressure of child care etc, this will mean we cannot continue our IVA and will have to declare ourselves Bankrupt.

However, I want to try and save my property if at all possible. We are in negative equity by roughly the amount of the 2nd mortgage (ie value is around that of the main mortgage), if the payment for the 2nd mortgage is factored in we can't afford to eat etc whereas if this is taken out we can just about break even with the basic income and expenditure allowances.

So the question is, if we go BR can the 2nd mortgage loan just be written off or will the OR be likely to force the sale of the property to realise some money even though it would all go to the first charge holder?

[Adam Davies]

Hi
The 2nd charge will remain against your house in bankruptcy so you will need to continue to pay it going forward. If you don't then they could force a house sale.
They may agree reduced payments with you rather than forcing this sale though
Regards

[TomThumb]

The problem is we wouldn't be able to pay anything to the 2nd mortgage under BR as we could barely divide the income from my wage up between the main mortgage and the basic essential living costs.

It may be wrong but I need to get out of this 2nd mortgage somehow as it is dragging us down to below the breadline

What normally happens in BR if you can't afford to pay anything to a 2nd charge holder and you are pretty much in negative equity on the 1st charge?

[kallis3]

If you are unable to pay the second charge, the creditor may well force the sale as Andy said, but see if you could come to some arrangement with them first.

[TomThumb]

Thanks for the advice, if the sale was forced but the 2nd charge holder got nothing as there was not enough what happens then?

[kallis3]

If you did BR I believe this shortfall would come into the bankruptcy and you would not be liable for it.

Hopefully one of the experts will be on later to confirm.

[MelanieGiles]

Why don't you give up the property and find cheaper rented accomodation?

[yodaguy]

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