www.iva.co.uk

My husband and I are considering bankruptcy (we have been advised to consider IVA but don't think we can guarantee the regular payments for 5 years). Our house is in negative equity and I hate the house and where we live. Do we have the option to hand the keys back to the mortgage lender, include the shortfall debt when declaring bankruptcy, rent a new home and start again from scratch?

In a word yes. The mortgage shortfall would form a debt in the bankruptcy provided you surrendered the property at the time. If you left it until after discharge you could end up with a second bankruptcy.

You are right not to enter an IVA if you cannot maintain the payments as a failed IVA would leave you back at square one and any monies paid would be lost. However, five years is a long time and nothing is guaranteed so IVAs can be flexible and it may be worth having a second opinion as the advice is free anyway. Hope it works out for you both.

The shortfall is captured by the bankruptcy regardless of the timing - so if there is a shortfall when you enter into the proceedings this will always be deemed to be a creditor under the bankruptcy regardless of when you apply.

as we are considering bankruptcy we have secured loan on our house & is in negative equity. would the secured loan also be included in the bankruptcy & be written off?? any advice would be GREAT.

Hi,

If you are giving up your home, then the secured loan should be included as well in your BR.

hi if you go br but decide to keep house,but cant afford the payments after say a year and had to leave it would be like being back to square 1 and possibly go br again.if you went br twice in short space of time how would this be looked at if you only had mortgage debt with a lot of neg equity on property thanks

I would think that when you go BR, you know whether or not you can afford to pay your mortgage and your secured loans on your home.

This is the sort of thing that needs careful thinking about before any financial solution is decided.