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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 10226
Experience:  I have been practising for 30 years.
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I have a question about repossession of property. The bank

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I have a question about repossession of property. The bank repossessed my house in 2012 and sold it in 2012. I've received a letter from them today asking for repayment of the shortfall. The have given me 10 days to respond. What's the best advice can you give me at this stage. Thanks N

Just because the house has been repossessed doesn’t necessarily mean that you escape pay the balance of the mortgage. It is normal for lenders to chase the borrowers in circumstances like this. How much are they asking for?

Do you have any other assets savings, pensions etc and what would be the ramifications financially for you with regard to work etc if you went bankrupt?

How much are they asking for?

Customer: replied 1 year ago.
Hi, They are asking for £42, 185. I don't have any assets to use as security. I'm just starting work as a self-employed, sole trader. I'm guessing I'll have to try and negotiate a repayment plan with them? Thanks N

One of the things that you need to consider is going bankrupt because that gets rid of it. It depends how important having your credit history trashed is although I imagine it’s not good at the moment with the house repossession. You would be discharged after 12 months and after 5 years it would no longer appear on the records. To repay £42,000 even if you were repaying say, £500 per month, is going to take 7 years and the lender is not likely to want to wait 7 years.

In circumstances like this, I suggest that you speak to an insolvency practitioner. Negotiations done by an insolvency practitioner with the threat of you going bankrupt hanging over the lenders debt, is sometimes a good incentive for them to settle for a lesser sum of money.

If they made you bankrupt, they would get probably nothing. However if you were to be able to raise some money by borrowing from a friend, perhaps £5000, they may accept 10p in the pound.

What you can also do is consider a Individual Voluntary Arrangement where creditors are lumped into a pot and you make an arrangement to pay a fixed sum in respect of creditors over a period of time, usually five years. If you struggled to pay the payments under the Individual Voluntary Arrangement (IVA) then your only alternative would be later bankruptcy.

It isn’t something that I would recommend that you try to do alone, but I would urge you to speak to an insolvency practitioner will take detailed instructions from you and advise you in depth.

Can I clarify anything for you?

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Best wishes.


Customer: replied 1 year ago.
Great thanks for your advice. No further questions. Kind regards N

Thank you. When you get a moment please don’t forget to rate my answer 3-5 stars so that I get paid. The thread remains open if anything crops up.

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