Going bankrupt - But guilty about buyers

[Rosey]

Hi,

We have somewhat of a financial pickle at the moment. We have been battling financial difficulty for a long time and our final attempts to overcome the problem have been blocked by red tape. Basically, we owe a 171k mortgage, 85k in secure debt between two further charges and we also have 20k in unsecure debt. Problem is our house is only worth 185k!
At the moment, we (my wife, 4yr old daughter and I) live in a 4 bed townhouse but wanted to downgrade to a rented 2 bed flat which would decrease our monthly outgoings. This would be due to lesser mortgage/rent costs, moving nearer to wife's place of work, lower council tax, less electic, gas etc etc.
After a year on the market, finally we accepted the offer on the house. However, our secure companies have said that they are not prepared to release the deeds due to the massive shortfall involved -one of them changed their tune from their initial phone call a few months back! We told them that if forced to stay, we wouldn't be able to meet the payments. "I can't comment on that" said the telephonist. They are absolutely not budging.
Having got various advice from the web and one of the debtline charities, it seems the best way forward is to take the rented property, stop the direct debits on the mortgage and secure loans, and put the money towards bankruptcy declaration and rent - and then work towards a brand new start in life.
Bizarrely enough today, we found out that we passed the credit check for the flat we are interested in - despite the fact that virtually all our unsecured debt is subject to DMPs and we are two months in arrears with one secure loan company!
Therefore, effectively we are nearly ready to go!

Two questions:
1.Do we 'hand the keys in' on our property at any stage? If so, should it be to the mortgage lender (who has enough equity to be paid off) or to the next charge down? Should we do this before filing for bankruptcy (knowing we now have another property to go to) or afterwards? Does it matter or affect the outcome of the secure debt being absorbed in the bankruptcy?
2. We feel really sorry for our buyers. We really feel their offer is as good as will be got, especially considering market conditions and the fact it took a year to receive an offer for the place. After repo, would the buyers be taken into consideration or would it just be advertised openly? I would hope that there could be some common sense approach and they stick with the same buyers - as they would realistically get best price.

Any advice, I would much appreciate.

[MelanieGiles]

Hi Rosey and welcome to the forum

Don't worry about your buyers - if they like the property enought they can negotiate directly with the first charge holder when you hand the keys back.

If you cannot afford to pay the secured loans, and the second charge holder refuses to allow permission to transfer the property, I do not think you have much choice but to hand the keys over to the mortgage company and move on. If you are intent on bankruptcy as an option, I would move first and then petition and then let your Trustee deal with the keys and the property.

[chris.g]

Hiya and welcome to the forum
You seem to have got things under control as far as your renting. Without putting a damper on things, be very careful regarding the tenancy T&C's as they may not let to br's. You will need to check this out to ensure that your tenancy will be safe when you file.
Both me and hubby filed in Feb this year but moved into our new home in Nov last year, knowing we were going br. We waited until after br to hand in the keys, The OR advised us to hand them back to the mortgage lender. Make sure you get some kind of proof that you voluntarily surrended your property as there has been a recent post regarding council tax liablility after br. Any negative equity in the property should be included in the br so you need not worry about any shortfall to your secured creditors.
As for the selling of the house, I can't imagine the mortgage Co./OR showing any preference to the potential buyers. I should imagine the house will go to auction for a quick sale. You could tell the buyers this and they may, if lucky, pick the house up cheaper than they have offered now....

[Rosey]

Thanks for responses - and is 'handing back the keys' quite literally just that. Our mortgage lender is the Halifax. Do we quite literally just need to go into a branch - give them the keys. I assume I give them a signed declaration of voluntary repossession and ask them to sign something?
Anything relating to the house - NHBC certificates, burglar alarm details etc, I take it I should just leave in the house for whoever to stumble across in good time?

[chris.g]

Our lenders were the Halifax. There are forms that need to be filled in, I can't remember the official names of them though.
We 'voluntarily surrendered'(I think that's the official term) our property on the 10.3.08. in the local branch. However, I contacted the mortgage dept last week and they had no notification of the keys being handed in or even the forms being completed. Make sure you get a receipt for the keys with your mortgage number on incase, like in our case, the keys go missing!!

[Rosey]

Thanks Chris,

Did you also do the same step of cancelling your mortgage/secure loans payments as soon as you went into rented?