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tdlawyer
tdlawyer, Lawyer
Category: Law
Satisfied Customers: 1096
Experience:  11 years experience of general practice.
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My brother is a business man whose company has just gone into

Resolved Question:

My brother is a business man whose company has just gone into liquidation sadly! He owns a house that he bought for my parents 7 years ago! They are both retired and down as dependents. My brother has an interest only mortgage on this property. Unfortunately my brother will have have to declare personally bankrupt along with his wife!
1. Can my parents take over the payments of the mortgage?
2. Will they automatically be evicted?
3. How long does the process of repossession take in this case
Submitted: 3 years ago.
Category: Law
Expert:  tdlawyer replied 3 years ago.

tdlawyer :

Hello, welcome to the website. My name isXXXXX can assist you with this.

tdlawyer :

Your parents should realistically be able to take over the mortgage. However, there are a few steps to getting there.

tdlawyer :

Does the company own the property with the interest only mortgage, or is it him personally?

Customer: Hi Tony main worry is my parents are pensioners and will struggle probably have to housing association etc! They have spent a lot of money on internal decoration new bathroom etc
Customer: Sorry it's a personal residential mortgage
tdlawyer :

Okay. So, if he owns it, and is to be made bankrupt, what you will find is that his trustee will likely declare the premises as onerous (assuming there is no equity in it).

tdlawyer :

That would mean he would wish to get rid of the property from the estate.

tdlawyer :

So, just to check, does he have equity in the property?

Customer: no he didn't put anything down on the house he has a mortgage of £163,000
tdlawyer :

Do your parents pay rent to him?

Customer: no as they both just have basic pensions
tdlawyer :

Okay. Then they might wish to consider offering to pay the bank/lender to remain there, thus effectively taking over the mortgage. Perhaps more realistically, though, the better thing would be for your brother to continue paying, even though in bankruptcy, although I expect that might be difficult to achieve as this is not his house where he resides.

tdlawyer :

I expect in reality your parents will have to try and acquire the house, or perhaps with your assistance, offering to but the house and take it over and make payments.

tdlawyer :

Otherwise, it would have the effect of putting your parents before other creditors, which I can understand why you would want to do it, but from a trustee's perspective, it's unlikely to go down well as a reason.

Customer: i can help them pay the mortgage do we just write to my brothers mortgage company and say we will pay what my brother pays per month? Or Dow have to put the money in my brothers bank account to cover the monthly payment if the mortgage?
Customer: who would be a trustee that hasn't come up at all?
Customer: I also assumed my brothers bank accounts would be frozen
Customer: because he has only paid interest only mortgage hasn't paid anything off the mortgage so does this have implications
tdlawyer :

Start with the trustee first - once bankrupt - see what he suggests as if the numbers add up in a certain way, it might be possible to do it without troubling the mortgage company.

tdlawyer :

Accounts are not frozen as such, but the trustee needs to approve expenditure etc.

Customer: Sorry I've no idea who a trustee is
tdlawyer :

The fact it's an interest only mortgage means there is no rush from the trustee to sell the house and release the equity as there isn't any.

tdlawyer :

A trustee is appointed to a bankrupt's estate once the bankruptcy order goes through.

tdlawyer :

They then administer the bankrupt estate.

Customer: ok what about defaulting on payments does this have implications
tdlawyer :

Yes, the lender could repossess. They won't jump at it instantly, they often give a chance to get back up to speed on the instalments, but equally, if others can make the payment in the meantime, that's the best thing.

tdlawyer :

What you need to avoid, and hence why you have to speak to the trustee, is the trustee contacting the lender telling them they don't want the property any longer and that they can repossess it.

tdlawyer :

Your brother should sort this though in his initial meeting with the trustee, which he is likely to be called to.

tdlawyer :

So long as the payments continue to be made though, I don't think there will be a big issue here, and I expect the property will not get touched.

Customer: is it going to be worthwhile paying the mortgage? Don't want to be wasting money if it's going to be repossessed or taken as part of the bankruptcy
tdlawyer :

Why would they repossess though if you're paying - that's all the lender is interested in.

tdlawyer :

This is also why it's worth speaking to the trustee, to make sure he isn't going to saying anything inconsistent with that - and I doubt he will be.

tdlawyer :

Does this answer your question? Is there anything more I can assist with?

tdlawyer :

Can I ask whether you're happy with the service today please?

Customer: Yes very happy Tony! You will have helped my parents hugely as my mum is on the verge of a nervous breakdown with her son going through this and potentially losing their beautiful home! Thank you doesn't come close!!
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