# UK Bankruptcy an option?



## anno

Hi all,
This is my first post. Here is my situation:


I have rental property with a friend: at least 120k in neg equity
Myself and hubby have another rental property: 100k neg equity
We have a mortgage on our current home - another 100k neg equity

We have many loans, credit card debts etc
Both working.
Rent doesn't cover the rental properties & currently on interest only
Always in overdrafts.

Should we either:
A) Try to cut deal with bank  - offer to sell properties and pay debt + walk away?
B) Move up North for a year to file for bankruptcy?

We just want to be debt free. Even if we could get rid of mortgages, we could  pay off other loans/credit cards.

Any advice would be greatly appreciated.


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## PaddyBloggit

em .... did you not do a search of AAM? Lots said on the matter - including here:

http://www.askaboutmoney.com/showthread.php?t=146956


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## anno

Yes I did a search, just looking for advice on individual situation.


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## PaddyBloggit

Why not fill out a Money Makeover template:

http://www.askaboutmoney.com/showthread.php?t=61289 

and post it here in a new thread:

http://www.askaboutmoney.com/forumdisplay.php?f=62

People will then be able to advise you on your specific circumstances.


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## cormirl

anno said:


> Yes I did a search, just looking for advice on individual situation.


Just go bankrupt and live your life again


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## browtal

I don't agree with 'just go bankrupt and live your life. Get advice on best solution for your situation.  Being in negative equity is not always the most important thing to consider. If your rent can cover interest only, you may be able to keep your rental properties. Rents cannot stay low for ever.
The most important thing is to try to live within your means. That may mean a period of tightening your belt, but if you can ride this out you will be a better citizen and  a stronger person. 
If it cannot be done and you have tried you can be happy with your effort.
What a great little country if everybody had the same solution. Who pays the piper in the end.
Browtal


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## Steve Thatcher

Anno from what you have posted, it does seem that each month your situation gets progressively worse. You are in OD all the time, you cannot pay your investment loans, but I guess you are maintaining the mortgage. How long can that realistically continue.
Approach your lenders, ask them what they propose in your situation. Start with the lenders on the investment property. See what they will do. If they have no helpful suggestions then seriously consider the bankruptcy option. 
What you cannot do is to to struggle and make yourself ill.

Steve


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## munchy

If one goes to UK to become bankrupt and say in a few years time ends up working and living in the UK, what happens:
1- to ones credit rating - how long does the ruling last and affect ones ability to 'start over' in the UK
2- to any investments/ property or cash held in either the UK or offshore (eg Jersey etc)
3- Any loans/ debts or mortgages held there
?


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## Bronte

In this case there are some problems.  If Anno goes bankrupt what happens the 'friend' they would then be liable for the full debt.  What about their jobs.  Everybody wants to be debt free.  But are the properties bringing you into overdraft or is it lifestyle.  Without all the facts and figures it's impossible to give proper advice. 

Going bankrupt in the UK is not for everybody.  If you have unsustainable debts then it can be a good option.  But you have to weigh up all options.


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## Steve Thatcher

munchy said:


> If one goes to UK to become bankrupt and say in a few years time ends up working and living in the UK, what happens:
> 1- to ones credit rating - how long does the ruling last and affect ones ability to 'start over' in the UK
> 2- to any investments/ property or cash held in either the UK or offshore (eg Jersey etc)
> 3- Any loans/ debts or mortgages held there
> ?


 
Hi Munchy
1) your credit rating is knackered for 6 years
2) you have to declare all your assets as you do in any bankruptcy across the EU. It then belongs to the OR. Failure to disclose it can result in an application to annul the bankruptcy, and certainly proceedings to recover it.
3) Any loans and mortgages are written off, but any property secured by these if owned solely will be realised for equity or handed back to the creditor

Steve


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## Bronte

What do you mean you have no debts?  You have a mortgage?  Are you able to pay it?  You have to give more details if you expect any meaningful advice.


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## 44brendan

This makes no sense. bankruptcy is not an escape clause from existing debts that can be serviced. Nor is it to be regarded as anything other than a final solution to those who are heavily indebted.


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## 44brendan

Leaving aside any issue of moral judgement, walking away from debts is never an easy solution. Handing back the keys is also not an option. If your property is in negative equity & you are on a relatively modest income you can approach the Bank & offer to assist them in selling the property in return for acceptance of this as a full settlement of your loan. Thet will only accept this if they feel there is no advantage in pursuing you personally for the balance. make sure that you are fully aware of the consequences before taking any action.


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## ClaireM

So are you saying you want to try and deck are bankruptcy fraudulently, hiding your savings but getting rid of your debt?

Is that a crime? Can you go to jail for it?


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## Bronte

spaneurofor said:


> . Because if answer is yes I could consider sharing/ giving my savings to different relatives rather than paying back a building society that has screwed me, before applying for bankruptcy.


 
In what way has the building society done you wrong? 

And nothing stopping you burning your savings or giving it away. Haven't come across the option of buring the money before but it's an interesting one.


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## Bronte

spaneurofor said:


> Was offered initially a tracker mortgage back in 20xx. As i it was being processed broker told me bank had change the offer and they were only offering a "discount tracker" which means they offered a diferent interest margin ECB+0.99 (marginal difference when compare to offer nr 1 which was ECB+1.1 ) but after two years they would adjust it. When I asked what adjust would mean they said not to worry it will remain the same, or similar.
> I bit the bait.


 

What do you mean you bit the bait, you had a choice to take it or leave it. Did you understand the difference between the two rates? What was the actual difference other than the rate of margin. Is it ath the 1.1 rate was for the lifetime of the mortgage and the .99 was for 2 years reverting to something else? What was that change, did your solicitor explain the difference to you?


The discounted tracker was actually cheaper than the original tracker.  But you are saying that somehow the broker and bank were in cahoots to mislead you.  I don't see that from what you've posted.  The ultime cost difference to you is 2500 per annum, is that correct?  And for this you want to give it back?  Doesn't seem reasonable?


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## Bronte

There was no scam based on what you've posted. Banks can and do change their mortgage rates and offers all the time. Sometimes customers even end up on a better deal than the initial bank offer, in your case it didn't but you could afford the rate and you took it.


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## Bronte

Banks mortgage offers to customers are based on the rate of interest they pay on borrowed money, this changes all the time and so banks have to change their products accordingly. 

That is not a scam, your rate could have been better but in your case it was worse, no scam. 

Whether it's fair that one is offered a certain rate and this can change right up to drawdown is a matter for the regulator. But it is clearly mentioned in the terms and conditions that the rate can change until drawdown.

You wouldn't be on here claiming it was a scam if the rates had gone the other way for you.


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## positron

spaneurofor said:


> However my original question was if you have no assets and, more important, no debts would you still be eligible for bankruptcy. Because  if answer is yes I could consider sharing/ giving my savings to different relatives rather than paying back a building society that has screwed me, before applying for bankruptcy.



Irrespective of the motives and background, this is a very unique and interesting situation / thinking, and I am curious what would happen in such a case. Anyone?


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## cormirl

The bankers/lenders loved to lend here because we come from,a high moral background and therefore they calculated their low risk of lender to this nation. The gov and banks have played us for fools and because of this moral judgmental society of ours we feel it's the right thing to do to pay it all back and if you have the means to pay back the loan you should whether you have NE on your property or not. Here in America people hand back keys all the time and go bankrupt if need be particularly if they see themselves stuck in one place with a property gaining no return or even breaking even. They move on and build a nice life for themselves again. In Ireland this view is a complete taboo,you must honour all debts. I personally woudn't judge someone for trying there best to offload their debt using whatever tools necessary provided they try to reach some kind of settlement first, I think people deserve a second chance if their investment falls through. In Ireland it's a penal system. Banks should just repossess and allow you to take a bankruptcy/PI route similar to what happens in most westernised nations. Obviously you don't want to have all your savings in your a/c when going down the bankruptcy route, try Vegas as good place to put your money! I'm sure this post will ruffle a few feathers out there.


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## robinsmith

Bankruptcy should be considered only as last option. You will need to make a fresh start after enrolling into bankruptcy plan. It become difficult for you to restore financial situation. It is better to pay off bills in managed way by releasing some value of mortgages or sell off some property to cover your bills. It is wise idea to pay off high interest debts first.


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## Fr. Ted

Am I understanding this correctly re O Donnells if they had moved earlier or started UK proceedings first they would have been ok??  but because bankruptcy started in Ire by bank first snookered?

[broken link removed]


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## Wishes

That's the beauty of the UK!  You can bankrupt yourself there before your nailed to the cross here!


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## Steve Thatcher

Fr. Ted said:


> Am I understanding this correctly re O Donnells if they had moved earlier or started UK proceedings first they would have been ok??  but because bankruptcy started in Ire by bank first snookered?
> 
> [broken link removed]



The O'Donnells problem appear to be two fold, first they seem not to have been wholly honest when filing their papers and they did not seem to make their whereabouts known to their creditors, this is fatal on both counts.

My clients are having no such problems cos I get them to do it properly.

I have taken eight people through in the last two weeks

The papers have sensationalised this story but in fact their strapline is wholly wrong

Steve Thatcher
Www.debtoptions.ie


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