# Why would a bank want to declare a mortgage holder bankrupt?



## tester1 (19 Dec 2011)

Basically the question above. 
What effect would this have?


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## Brendan Burgess (19 Dec 2011)

It's very unlikely that a bank would do this to a normal mortgage holder for a normal house. 

The bank will first get repossession of the house, and will then be looking to recover the shortfall. 

if the borrower has assets but refuses to pay the shortfall, they may seek to have him made bankrupt. I have never heard of it happening, although it is possible.

It's quite likely that they might threaten someone that they would make him bankrupt if they think he has assets with which to discharge his debts.


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## tester1 (20 Dec 2011)

Thanks Brendan, really appreciate that


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## Wishes (20 Dec 2011)

Just before I engaged in the MARP process the bank told me I was bankrupt. It was obvious for all and sundry to see that I hadn't got two cent to rub together. 

I have to my name, two properties which are both in negative equity and no money, bar a small amount I receive each week from a low paying job.

I pay a nominal amount to the bank each month but I believe if my wages drops any lower they may want me to file for bankruptcy.

I feel I am being muscled out of my MARP arrangement, so I see nothing else but them looking to the bankruptcy route. 

In their eyes they may want to sell the property, rather than wait on the likes of me paying them in dribs and drabs each month.


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## Brendan Burgess (20 Dec 2011)

Hi Wishes

There is absolutely nothing to be gained by the bank by declaring you bankrupt. They have no intention of so doing.

They will ask you to sell your properties. If you don't agree to do so, they will seek to repossess them. They will sell on the properties and you will owe them the shortfall. 

You would then have no assets, only liabilities. Bankruptcy is an expensive process and the banks don't waste money on it.

If the bank believes that you have substantial assets over which they don't have a mortgage, then they could make you bankrupt. 

Brendan


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## Steve Thatcher (5 Jan 2012)

Brendan Burgess said:


> Hi Wishes
> 
> There is absolutely nothing to be gained by the bank by declaring you bankrupt. They have no intention of so doing.
> 
> ...


 
Hi Bendan and Wishes, my take on this that perhaps you are right and the banks may not prusue bankruptcy, but they sure as eggs are eggs will not walk away from the money judgement. They have up to 12 years her in the UK in which to chase for payment of a money sum due from property, I am unsure if that is teh same in Ireland. if not they can certainly still pursue you for upto six years. In essence for you that means that evereytime you sek to get started again and generate income they will be after it. 
As I see it if you can get through 6 or 12 years being pursued by your mortgagor that is ok. If you don't want to put up with that then there are options.

Steve


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## Bronte (5 Jan 2012)

Wishes said:


> Just before I engaged in the MARP process the bank told me I was bankrupt. It was obvious for all and sundry to see that I hadn't got two cent to rub together.
> 
> I have to my name, two properties which are both in negative equity and no money, bar a small amount I receive each week from a low paying job.
> 
> ...


 
We have seen no instance of a bank declaring someone bankrupt who has no money.  There is no point.  Instead they will let you drip feed the mortgages and one fine day when they have had enough they will take the properties off you, but to do this they do not need to waste money on bankruptcy.  Banks have not as yet decided to take properties off people because of the standstill property market.  But some time soon they are going to have to start making decisions on what to do with the negative impact these non performing mortgages are having on their balance sheets.


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