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Alex J.
Alex J., Solicitor
Category: Bankruptcy Law
Satisfied Customers: 3496
Experience:  Bankruptcy, liquidations, administrations, pre pack sales, re use of company names and director duties and offences.
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Hi there i am having problems with my bills as due to the recession

Customer Question

Hi there i am having problems with my bills as due to the recession my once successful business has dwindled down considerably. I own 4.5 houses, one of which was I has a negative equity northern rock product applied owe £250,000 and house is now worth £190,000. Please can i talk to someone about my options - tahnks
Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  Alex J. replied 3 years ago.

ajlaj01 :

Hi, Thank you for your question and welcome. My name is Alex J and I will assist you.

ajlaj01 :

Can you tell me what your total indebtedness is? Do all your properties have mortgages? Are you a company director?

JACUSTOMER-i4yvjhaq- :

Hi Alex - I am currently a sole trader and and i am at t stage where my income is less then my outgoings i get in around 10,000 a month and my outgoings are around 12,000 a month and i am not sure what would happen if i stopped paying for one of my mortgages - if i let the house be repossessed could they come after my other houses?

ajlaj01 : Hi. Thank you. If you have other assets and default on your mortgage then they may seek the short fall from your other properties. Do you have equity in any of the properties? Kind regards. Alex J
JACUSTOMER-i4yvjhaq- :

hi yes the house that i have equity in is the one i live in i rent out the others but again flats proved to be pretty bad investent and there is little equity in them - i also have a few unsecured loans and credit cards. I guess what i am asking is if i default on my credit cards or loans then i thought that the debt would be written off and i would get 6 years bad credit and ccj's against me - but with the house that is causing me the most trouble would they be able to come after other assets as i am not trying to declare bankruptcy rather stop paying and fall in areas for that particular mortgage - please understand that this is the last choice for me and i am still trying to get out of this mess and i have never had bad credit in my life and always paid my taxes and i am now 41 year old - its just that this negative equity northern rock product leaves my in a tough spot.

Alex J. :

Hi, Thank you. I understand your concern. What you could do is the following: (1) Enter into an informal voluntary arrangement with your creditors, the only way this will work is if you stop using your credit cards and come to a repayment plan with all your creditors based on affordability i.e how much money you make each month do you need to live and how much can you contribute to the debts.

Alex J. :

(2) You could deal with Northern Rock by offering then a charge over one of your properties with equity in. You could then seek to sell that property so you are only left with the balance of £60k which will be secured against another property, on that basis the repayments on £60k will be far more manageable than £250K.

Alex J. :

(3) You could go bankrupt, all your assets will be sold to repay your creditors and after one year you will have the slate wiped clean and can start again. The down side is you will not be able to obtain credit or be a company director post bankruptcy.

Alex J. :

As a first step I would go and tell nothern rock about your issue. Before you tell them come up with a plan to sell the property and repay them a large sum, then will then ask you about your affordability to make monthly repayments and what assets you have. You can then see if they will consider accepting a charge on your other home for the shortfall.

Alex J. :

Do you need the income from the negative equity property or do the repayments on it outweigh the income?

JACUSTOMER-i4yvjhaq- :

Hi - For the negative equity product the payments outweigh the income

JACUSTOMER-i4yvjhaq- :

Sorry pressed send by accident ... i am getting a little confused sorry - so because the credit cards and car loans etc are not secured against my properties if i default on them i didnt think they could chase the amount owed but instead at the worst report bad credit and lodge ccj's - is that right or am i totally wrong?

Alex J. :

Hi, Thank you. If the unsecured creditors obtain a CCJ they can use the CCJ to get a charging order over your assets. This effectively an involuntary charge over your property.

Alex J. :

What you would ideally like is to try and come to some form of agreed repayment plan with them. Your repayment plan will be easier if you can:

Alex J. :

1) Offload the negative equity product at least in part so you have more monthly income spare;

Alex J. :

2) tell them you would like to restructure the payments at the earliest stage so as not create distrust.

Alex J. :

Banks will very quickly lose any goodwill if you just allow a default to happen without telling them. I look forward to hearing from you. Kind regards AJ

JACUSTOMER-i4yvjhaq- :

Ok thanks for this - this is really the last option anyway so fingers crossed i can get myself out of the hole - one of the things that makes the situation even worse id that if you remember i originaly said i own 4.5 houses and that is because i helped my friend buy a house several years back - i have never ever had anything to do with the running of the house or paying the mortgage bills etc but i am down as a principal on the mortgage - i am worried that this asset which in fact has some equity in it too - should I advise him to remortgage although i'm not sure he is an a financial situation to do it?

Alex J. :

Hi, Thank you. Is the property registered in your name? As long as you can avoid bankruptcy then that house should be ok. How much did you lend him?

JACUSTOMER-i4yvjhaq- :

Hi AJ sorry have been in meetings trying to salvage my position - ok so I didn't lend him any money i just was down on paper as a joint owner and the strength of my credit background was able to get the mortgage approved - he has then managed and paid for it himself.

Alex J. :

Hi, Thank you. Do you have a deed that proves this or evidence to show that he has been making all the payments? if you actually when bankrupt a trustee in bankruptcy would have to prove you owned some of the beneficial interest in the property. If you did not pay the deposit and have not paid the mortgage this would be difficult to prove. Therefore just make sure your friend has accurate records of making these payments. I look forward to hearing from you.

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