# Thinking of going Bankrupt in England.



## Wipetheslate

*Age:
*41
*Spouse’s/Partner's age:*
34

*Annual gross income from employment or profession:*
E12000
*Annual gross income spouse:*
E30,000

*Type of employment:*
Me: INCOME FROM RENT -A-ROOM IN HOME AND DIFFERENCE BETWEEN RENT RECIEVED AND INTEREST ONLY PAYMENT ON INVESTMENT PROPERTY (HOUSE) 

*Expenditure pattern:*
We try to pay debts and support kids and family home ,no frills. 

*Rough estimate of value of home*
E350,000
*Mortgage on home*
E520,000 - 
*Mortgage provider:*
ICS
*Type of mortgage: Tracker, interest only, fixed rate*
Tracker /INTEREST ONLY
*Interest rate*
1% ABOVE ECB


*Other borrowings – car loans/personal loans etc*
HALIFAX CREDIT CARD 12K 
MBNA 2K
TESCO VISA 3K
FAILED SOLE TRADER LEASING LOANS
FRIENDS FIRST 12K
AIB 5K
CREDIT UNION 15K

*Do you pay off your full credit card balance each month?*
NO

*Savings and investments:*
E5800 savings IN CREDIT UNION / HELD FOR LOAN

*Do you have a pension scheme?*

NO FOR BOTH

*Do you own any investment or other property?*
*RETAIL SHOP* MORTGAGE 288,000
WORTH 150,000 
RENT 15K
INTEREST ONLY PAYMENT NOW 21,200
PTSB 7.35% 


NPPR HOUSE MORTGAGE 300,000
WORTH 220,000
RENT 14400
Interest only payment 690 pm 
ICS Tracker 1.25 above ECB (10 YR INTEREST ONLY) 4 YEARS LEFT ON INTEREST ONLY.


*Ages of children:*
6 & 3

*Life insurance:*
MORTGAGE PROTECTION INSURANCE ON ALL PROPERTIES ONLY.

*What specific question do you have or what issues are of concern to you?*
As you can see things are not looking good 
I had to close my business Aug 2010 and things have gone from bad to worse ever since .A Lot of the credit card debt and unsecured debt was built up trying to sustain the failing business and 4 families livelihood's ,but in hindsight I should have closed in 2009. 

Having a young family and a working partner I'm beginning to consider declaring bankruptcy in England or wales. Would you ? I don't know too much about the procedure but as I can see you need to wait until the banks repossess all my properties and when the shortfall is registered as a judgment against me that is the time to go bankrupt and wipe the slate.
the investment shop and investment house are in my sole name and mortgages too, our home is in both our names and mortgage in both names too, all unsecured debt is in my name only. 

WE ARE NOT MARRIED

IS THERE ANY WAY OF STILL BEING ALOWED TO LIVE IN OUR FAMILY HOME IF I DECLARE BANKRUPTCY ?

BANKS OWN HALF AND PARTNER OWNS HALF ?
ANY ADVICE WELCOME 
THANKS


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## Sue Ellen

Hi,

Welcome to AAM.

Sorry to hear about your financial problems. Hopefully others here can give you some advice.

In the meantime there are previous threads here on bankruptcy. The key post in particular may help.


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## Steve Thatcher

It was my original post that you have been referred to.

It may be possible for you to stay in the house, if as you say the bank holds half and the o/h holds half.

A lot depends on who has the unsecured debt in their name and who holds the debt on the secured properties. If you were lucky enough to have all your big debt in spouses name for instance it might be possible for spouse to go bankrupt here in UK and use his savings to establish his COMI for instance. 

You might then be able to turn around to a lender(same lender) and argue that they have a property worth at best €350,000. They have to write off shortfall owed by spouse in bankruptcy, and so their option is to put property on market and perhaps take a bath, or do a deal with you to take property with new mortgage at a fixed rate in your own name at a realistic level.

It may not work, but I know if I was a lender in this situation I might consider your offer. The consequences for them is that you leave and they offer the property at auction and get €200,000 or less.


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## Wipetheslate

*Thanks Steve for information.*

All the unsecured debt is in my name only ,and the two investment properties mortgages are also in my name only ,my partner,she works and is half owner of our home which we both bought together(shared mortgage).
I suppose I really want to know how it would play out for her re: the family home, I'm in a dilemma weather to struggle on trying to cover interest only on all mortgages (which are in serious negative equity)and have no disposable income to enjoy life with my young family or should I initiate the process of ridding us of debt.
I honestly cant see any positives in keeping on these properties into the future, if I go bankrupt I could be clear of this burden and be back on track for the future, Am I right in thinking that I have to wait untill the banks repossess the properties and convert any shortfall into a judgments against me  untill I initiate bankruptcy ?
      I,m also looking at doing a part time degree course in computers which I've always had an interest in ,when you think I could be qualified and trying for a new career in 4 yrs .

Thanks.


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## Steve Thatcher

Hi Wipe, sorry I didn't get back to you sooner. The main issue here as usual is the matrimonial home. You are joint and severally liable for any losses on the mortgage, so if you ever lost the house, you and her could be pursued.
However I guess you want to stay in it. So for as long as you pay the mortgage no one will see you out of it. That is the case even if you go bankrupt.
Your share in that property will vest in the Official Receiver here by law. There is no equity and not likely to be for years and so he will want shot of his share. He will sell it to your wife for his legal fees. 
So your wife willl now own the whole property. As you are bankrupt (lets assume that for these purposes) your unsecured debts are written off, any liability you may ever have had on the mortgage on the family home is gone and the other properties have gone to the OR, who has handed them back to the banks and simply said, sell them or do whatever and tell me what the shortfall is. That to is written off. So you need do nothing with those properties to benefit from the write offs in bankruptcy.

The only issue is whether you can afford to keep the house on. If you can then there will not be an issue for you at all.


Steve

Hi Steve ,thanks for your advice and your number I'm still going through things with my partner ,as you can imagine its a huge decision,I have your number for when we decide .I was talking to a solicitor today and he said that the banks here in Ireland don't have to play ball with the English bankruptcy as the mortgage is not automatically covered under bankruptcy ,is that true ? He said the negative equity has to be converted to unsecured debt before I declare bankruptcy ,can you clarify this please as its a very important point . Can banks play nasty and do they ? 
Thanks again .


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## Guest105

Wipetheslate said:


> I was talking to a solicitor today and he said that the banks here in Ireland don't have to play ball with the English bankruptcy as the mortgage is not automatically covered under bankruptcy ,is that true ? He said the negative equity has to be converted to unsecured debt before I declare bankruptcy ,can you clarify this please as its a very important point . Can banks play nasty and do they ?
> Thanks again .



Read through this website  [broken link removed]

and the articles along the right hand side in particular this one [broken link removed]


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## Bronte

Wipetheslate said:


> .I was talking to a solicitor today. He said the negative equity has to be converted to unsecured debt before I declare bankruptcy


 
This is a very important point as you say.  Time a poster who has given excellent advice in this area has stated the same as your solicitor.  That the mortgage debt has to be converted to unsecured debt first.  Until another poster can prove otherwise I would stick with this advice.  I would be interested to hear what Steve has to say on that.


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## Wipetheslate

*Can you repost article please.*

That first link is Steve's website and the second link doesn't lead to an article, can you re-post it please thanks.
 I would appreciate TIMES input on this particular point in regard to Irish mortgages if available .


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## Bronte

Wipe, have a look at the 'forums' home', then 'mortgage and debt arrears' and the key post there has great info from Time.  I can't remember where the other post is about mortgage debt having to be transferred into unsecured debt but I remember some poster brought it up and Time and I discussed it.  I've too many posts to try and find it.  

If someone does find it, it should probably be added to the key post mentioned above.


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## Steve Thatcher

*Your mortgage and bankruptcy*

Hi everybody, the point about a bankruptcy is that when you go bankrupt your interest in the property vests by operation of law in the Official Receiver, so on a jointly owned property, if H and W went bankrupt the property would in effcet be "owned by the OR, he has three years to deal with it. If you no longer want it, H and W can hand keys back to bank, who will sell it. The amount of the mortgage shortfall will be written off in the bankruptcy. 
There does not need to be an unsecured amount owed on the mortgage before you go bankrupt.
Now if just H went bankrupt on the jointly owned property, and the property is sold, there will again be a shortfall. the mortgage company cannnot go after the H, but it could go after the W as she would be liable for the debt and she was not bankrupt and so the debt against her was not written off.
This is fact.
Steve


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## Bronte

Steve that may be the law in England (of which I have not much knowledge), do you have a case where this rule was recognised by an Irish bank, basically where the bankruptcy in the English system was recognised and applied to the Irish mortgage, a secured debt.


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## Jim2007

Bronte said:


> Steve that may be the law in England (of which I have not much knowledge), do you have a case where this rule was recognised by an Irish bank, basically where the bankruptcy in the English system was recognised and applied to the Irish mortgage, a secured debt.



It will be interesting to hear from Steve, it there is case law relating specifically to immovable property and entries in a public registers.  Because in both cases, the EU rules state that regardless of domicile, Irish courts would have exclusive jurisdiction...

Furthermore, there is provisions for "choice of jurisdiction" clauses, which would mean that in certain circumstances, English law would not apply either.

It is also interesting to note that it is still possible to start secondary proceedings in Ireland, even after proceeding start in the UK, if significant assets exist here and should this happen, the UK law will not have precedence!  

My guess it that it is not nearly as black and white as people seem to think...  especially since there seems to be very little case law concerning how Irish courts will deal with these matters.

Jim.


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## Wipetheslate

*English Bankrupcy*

My understanding is that the reason people don't go to Belfast to declare UK  bankruptcy is that the Irish banks watch out for "clients" of theirs who might be on the list and try to scupper their applications with some technical objections,whereas if It's listed in some obscure local mainland court it slips under the radar and the bank miss their chance to halt the application. Steve can you respond to some of these concerns  if you have the time . I know you are genuine in trying to help people with debt problems here,and would apriciate you clarifying things ,do you personally know people who were in similar circumstances to myself who came through the UK bankruptcy process.
Thank you all for input .


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## Jim2007

Wipetheslate said:


> My understanding is that the reason people don't go to Belfast to declare UK  bankruptcy is that the Irish banks watch out for "clients" of theirs who might be on the list and try to scupper their applications with some technical objections,whereas if It's listed in some obscure local mainland court it slips under the radar and the bank miss their chance to halt the application.



It does not matter, if we are talking about a mortgage, then we are dealing with a charge on immovable property and as such it will fall under the jurisdiction of Irish courts, at least that is my reading of the EU rules.

I expect that at a minimum the bank would get to keep the house or other assets upon which it has a charge.  For the me the question now becomes, would this be enough to allow the bank to start what is referred to in the documents as secondary proceedings?  Because if so, then it could well be that the UK proceedings would not be recognised....

Hopefully someone has the answers

Jim.


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## Steve Thatcher

Hello again, I thought I had posted a response to this whilst on holiday last week, but it doesn't seemed to have gone.
I have looked at this again. I simply can't find any reason why the an English bankruptcy wouldn't be vaid in Ireland with all the attendant consequences. That is what the EU rules provide for.
Guidance is also given in the notes for the OR here to which this is the link. 
http://webarchive.nationalarchives....icalManual/Ch37-48/chapter41/part4/part_4.htm

I can't do any better than this. If anyone has actual case law or evidence that a bank in Ireland has challanged the EU law then I think we are all safe to conclude that the property will be dealt with by the OR in England as he would deal with an English bankruptcy.

Steve


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## Jim2007

Hi Steve,

It's been a while since I looked at this, but from what I recall the EU rules specifically state that in the case of immovable property and entries in a public registers, it is the local courts that have jurisdiction.  Thus an Irish mortgage would be subject to Irish law as it refers to immovable property and presumable a charge will have been registered - hence an entry in a public registry.  In such a case I would expect that the bank would simply refuse to release the deeds of the property and thus it would be come an issue for the Irish courts.

Jim


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## frostie

Jim2007 said:


> Hi Steve,
> 
> It's been a while since I looked at this, but from what I recall the EU rules specifically state that in the case of immovable property and entries in a public registers, it is the local courts that have jurisdiction.  Thus an Irish mortgage would be subject to Irish law as it refers to immovable property and presumable a charge will have been registered - hence an entry in a public registry.  In such a case I would expect that the bank would simply refuse to release the deeds of the property and thus it would be come an issue for the Irish courts.
> 
> Jim



Any proceedings initiated after the first proceedings have commenced are 'secondary' proceedings, please see below - this is from the EU regulation on bankruptcy, which came into force in 2002.

"The courts with jurisdiction to open insolvency proceedings are those  for the Member State in which the “centre of a debtor's main interests”  is situated. Where a company is concerned, this will generally mean its  registered head office. 



But secondary proceedings can be opened  later to liquidate assets in another Member State. The law of the Member  State in which such insolvency proceedings are opened determines their  effects. 



The Regulation provides that proceedings opened in  several Member States are to be coordinated between them, notably via  active cooperation between administrators. 



All decisions taken by  a court in a Member State that has jurisdiction in the main proceedings  is basically recognised automatically in the other Member States  without further review."


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## Steve Thatcher

Hi Frostie
My understanding of that is that a Liquidator, Administrator , or Trustee already appointed can use the courts to open those proceedings. It would not be for a creditor to use.
Steve


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## frostie

Steve Thatcher said:


> Hi Frostie
> My understanding of that is that a Liquidator, Administrator , or Trustee already appointed can use the courts to open those proceedings. It would not be for a creditor to use.
> Steve



I think what we can take from this is that in any case, the decision of the court where COMI was established and proceedings are initiated have a binding authority on any secondary proceedings. I'll have a look for the link again - I did see something in relation to creditors as well on EJN. Will dig it up and get back to you


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## frostie

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32000R1346:EN:NOT

Hi Steve, 

Found the link on EUR-Lex - there's a lot in it, but have a look from  around number 16 onwards. This (I think) is the piece of information  we're looking for. What do you think?


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## Wipetheslate

*Any UK bankrupts willing to share experiences ?*

Thanks guys for the information,so my understanding is that the Irish banks which hold mortgages on Irish properties must comply with a UK bankruptcy if the person petitioning for bankruptcy has satisfied the COMI rule and is subsequently made bankrupt.
My main worry is can the bank circumvent compliance with the bankruptcy in any way ?Can anybody who has been through the UK bankruptcy procedure and had Irish properties brought into the bankruptcy please share your experiences if possible as it seems to me to be the crux of the whole issue .Thanks again.


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