Questions and Info relating to Property Issues inc, Charging Orders and Repossession

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ByLaurelLeaf
#471713 Hi

This is my first post and I'm looking for some advice if possible please.

I have read through as many threads as I can about second charges but would like some clarification if someone would be so kind please?

Ok, background is: have a mortgage and a secured loan. The mortgage balance is approk 57k and stupid First Plus loan balance is still 26k (bad idea taking that loan but that's another story)!

So we have had an offer on the house (selling and moving into a HA property due to overcrowding). The offer would leave a 11k shortfall after fees. I have spoken with First Plus lots of times about a shortfall since we were offered the property in August. I spoke with someone who works in shortfalls now we had an actual offer, to discuss the shortfall process and reading between the lines, it was suggested that they can block the sale of the property if they dont approve the shortfall application. Afforability is not an issue and we've never missed a payment.

I have spoken with my mortgage provider (Bank of Scotland) and was advised to put all this in writing to back office. I had been advised by Shelter to voluntary surrender the property if First Plus block a sale as cannot afford mortgage, loan and rent.

So my question is, can Bank of Scotland ask First Plus to remove the second charge so we can sell? (I haven't had a reply from them yet). BoS said they'd rather we sell than voluntary surrender. Sorry for the essay, but am rather anxious about the whole thing to be honest.
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ByJaneClack
#471714 Hello

If there is not wnough money to repay the second charge and it is a secured loan as opposed to a charging order then the first mortgage lender can overreach the second lender and agree that the property should be sold. They will only tend to do this if there is enough to clear their charge so in your case they should do so!

You will still owe any outstanding monies to First Plus but it has then become an unsecured debt which will give you options for clearing it. I should say however, that they often go for court action to get this "solidified". But it is unsecured ...
ByLaurelLeaf
#471715 Many thanks for your quick reply. I am hoping that Bank of Scotland will exercise the right to over reach. What is solidifying? I can offer to pay First Plus more than our contractual monthly amount once the property is sold and Shelter, CAB and Bank of Scotland said they would be stupid not to agree to such an arrangement, from my 'Googling' it appears that they are a law unto themselves though :-(
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ByJaneClack
#471716 What I meant by that is that they could try and get a CCJ so they can enforce the debt if a repayment plan is not agreed. The debt exists but if they want to make sure of repayment they can go for court action. They will agree to what you can afford so do not worry - and if they do not, the court will! A county court judgment can often be helpful as it allows you to negotiate with the court if the lender proves difficult. So do not worry! :)
ByLaurelLeaf
#471717 Thank you very much Sarah, you have been very helpful and given me the clearest response after speaking to lots of people!
ByLaurelLeaf
#471795 Just an update and possibly more advice if you have it please?

Bank of Scotland called me yesterday and told me they will not liaise with First Plus and will not over reach. I said we would have to go down the voluntary repossession route and she said fine as they will get what's owing on the mortgage. She said I had to go into branch to do this. My question is, should I write to Bank of Scotland and First Plus after I have signed the tenancy for the housing association house asking BOS to repossess and to tell First Plus that we will set up a repayment plan for the shortfall?

Is it likely that First Plus will go for a CCJ? Shelter advised same again; voluntary surrender. Have paid a token payment to mortgage this month as advised for moving costs and the new house has no carpets at all (not ideal in Dec/Jan). Was going to carry on token payment to BOS but full to First Plus to show we are paying and because BOS should get all and more than mortgage anyway. Does this seem right?!

Sorry for rambling on and thanks in advance.
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ByJaneClack
#471810 Right - yes, they will not overreach if they are going to get all their money back.

Basically I would get into the housing association property and you can certainly make token payments to both - if you cannot afford any more. Do check the lease on the housing association property as you may find bankruptcy is the best option for clearing all the outstanding debt including any shortfalls.

First Plus could well go for a CCJ but that would be included in any bankruptcy petition.

If you think the shortfall would only be £11,000 you could look at a debt relief order if your disposable incomes are under £50 but if you have other outstanding debts this may not be possible and, of course, voluntary surrender may well mean they sell the house at auction which would not get as much money.

I know bankruptcy is a big No No for a lot of people but for others it could well be the first step in rebuilding your lives.

I would telephone one of the free advisory services such as the Money Advice Service followed by Payplan, National Debtline or Step Change who would be able to take down all your personal circumstances, debts and budgets and see what they say.

I have sent you a private message.
ByLaurelLeaf
#471813 Thanks for this Sarah. I am hoping we will be able to make arrangements with First Plus to pay the shortfall. I only hope its not lots more than the 11k anticipated and Bank of Scotland sell the house at a fair price. We have 2 loans that end soon so will have more disposable income. I hope we can come to a sensible arrangement with First Plus, ie i don't want to have to pay stacks more than we do now. I will offer to pay more though as want to be rid of it as soon as we can. I wouldn't really want to go down the bankruptcy route as I think we can afford to repay ultimately?
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