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 bankruptcy postbag for march
 bankruptcy, buy to let and commercial
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Starting Member

United Kingdom
1 Posts

Posted - 30 November 2010 :  13:28:55  Show Profile  Reply with Quote
my wife and i bought our first house which is now rented out not a buy to let mortgage though and has no equity we also bought a house to let but is in need of lots of work also no equity, we also bought a home with a shop (1 property) on a commercial mortgage also no equity.
up untill earlier this year we were making a living from the shop we have used up every penny we could get to try to keep the shop going thinking things would pick up, my wife has even got a job to try and keep us from going under. i put all my debts with a debt management company but cannot even afford these payments anymore.
we have come to the point where we are 2 months behind with the commercial mortgage and are thinking bankruptcy is our only options left for us. would we lose all our properties? i know the shop has to go as we cannot manage the mortgage, and we were thinking of moving back into our original home once we have given our tenant notice, we were hoping to stay put til after christmas not just for our kids sake but also for our tenant. we dont seem to have much in assets as we downgraded our car worth around £1700 and the equipment in the shop is less than £1000 worth.
most debts are in my name but properties are in joint names
i am looking for work but i am so depressed and my wife is only getting about £600 per month
whats the best thing to do?
thanks for advice in advance

Edited by - corner on 30 November 2010 13:50:12

forum expert

United Kingdom
565 Posts

Posted - 30 November 2010 :  15:35:51  Show Profile  Visit Blackie's Homepage  Reply with Quote
Hiya Corner

The rules regarding property in bankruptcy are pretty clear cut in that your matrimonial home, or main place of redsidence, will be safeguarded as much as possible in that you may only have to pay £1 each plus legal costs if the property is in negative equity. However any additional property will be viewed differently unless you can prove that any income derived from them is your only source of income. It is more than likely that you would be forced to sell them or the Official Receiver may require you to pay him some of the rental income which you receive.

All the best

John Blackadder
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Richard P
Senior Member

United Kingdom
1701 Posts

Posted - 30 November 2010 :  19:50:56  Show Profile  Reply with Quote
Hi Corner

welcome to the forum

I was in very similar position with having BTL properties, i also felt i had moral responsibility to my tenants as such i waited 8 - 9 months longer to go BR in order that i could do the best for them.

I have kept one property in BR. (negative equity bt affordable mortgage

I was helped through the process by Paul and the team at Reviva and would encourage a call, especially with BTL props.

Regards Richard
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forum expert

United Kingdom
641 Posts

Posted - 01 December 2010 :  00:48:57  Show Profile  Reply with Quote
Hi corner,
I'll cover each property seperately, regarding the property that was your first house, had you been living there it would be regarded as the family home, and as it is in negative equity, you would be able to buy back the BI(beneficial interest) for £1 plus the OR's costs of £211. However, as it is currently let out, it would not be classed as the family home, so as you suggest you should give the tenant notice, and move back in before going bankrupt, so it becomes your family home again.

As for the BTL property, is there a tenant in it? if there is the OR will want full details of the tenant, rent payable, whether there is a tenancy agreement, gas and electric certificates etc, an then appoint an agent to manage the colection of rent etc, if it is not tenanted, then the OR will become trustee, but as it is the lenders security they can do what they want with it to realise the security,as long as they keep the OR informed. Unlike the family home, you wouldn't be able to buy out the BI.

As for the shop, I'm presuming this is on a lease(usually 10 years for businesses), which if it is, and you go bankrupt, then there is usually a clause in the lease that provides for it to be revoked upon bankruptcy. The landlord once legal formalities have been concluded can then get new tenants in it. Regarding the equipment in the shop, did you purchase and put it in there? the OR will usually get one of their valuation agents to value it, and if as you say it is worth £1,000 it would not be viable for the OR's agents to deal with it,as by the time fees etc are introduced, the OR would probably end up owing the agents money, so a third party could be invited to make an offer, or as happened with most of my cases, the landlord took possession to offset against rent arrears.

So by the sounds of it, the shop is draining your finances, so regards what to do,you should seek further advice from the experts such as Melanie or Paul Johns.

One last thing, were you a partnership or a sole trader?

Big Al
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