Questions you have before making a decision to go Bankrupt and the Bankruptcy process

Moderators: TalbotWoods, JaneClack

By JoeyMorgan
#212483 Dear all,

I hope that you'll be able to shed some wisdom over my tricky situation.

First of all, I'm not behind with any payments.
I still earn enough to cover my mortgage, bills and other payments.

What am I doing here then? Read on...

I own a flat that is currently worth about 180K and my mortgage on it is just about 150K - call it a good 85% LTV. I also have some Credit Card debt - about 20K, but no loans or store cards. I have savings in few ISAs - which are currently worth about 17K.

Life is nice you say... maybe, but:

The local council did complete major repair works on the block back in 2007 and finally presented us with the bill - about 45K per flat (leaseholder).

Needless to say, we are putting together a legal challenge against the charge, as the amount is absolutely extortionate. I'm sure it could have been done cheaper, but when the works were tendered for and completed between 2003 and 2007, the builders were having a field day with the costs of the works and charged whatever they wished. And the council paid and paid and paid... and now they ask for the money from us. Such is life.

We are hinted that the challenge could produce some savings, but typically these might well be between 5-10% at the most. And it will costs thousands in fees to surveyors and solicitors... so not worth it.

The charge that the council levies is per flat, so it stays with whoever the current owner of the flat is.

If I try selling the flat, the buyer will insist that I cover all of the charge (45K). Same if I put it on auction, and in any case I'm not trying to scam anyone out of their money.

I can only put together some 17K (cash in my ISAs) and perhaps get a loan for another 15K. I will still be about 13K short of the target and no, I cannot borrow more money on the flat, given that my LTV ratio is so high.

If I state to the council that I cannot pay the charge, they will probably sue me and make me sell the flat and pay [part of the charge] that way... And then if I fail to pay the difference between whatever the flat sells for and the 45K - they could sue me again and maybe make me bankrupt.

One way or another, my life will be shattered.

What I'm trying to do is figure how can I stop being the current owner of the flat, without going bankrupt or IVA-ed or whatever.

All I want is to keep my ISAs, keep my credit card debt - which I will continue paying - and somehow dispose of the flat.

Can I 'return' the flat to the bank and let them deal with it any way they want? Without this affecting my ISAs or debt? I'm really relying on the ISAs to bring me some income in my old age, as all the pension plans have proved such a rip-off!

Is there another option?

Thank you very much in advance
By Crunchynut
#212579 speak to a solicitor as this should be contained in your lease - it would appear that the council has acted wrongly - you know this obviously.

you cant 'return' the flat unfortunately without being chased for the shortfall and this will affect your assets etc

what does your solicitor say ?
By maccy68
#212585 totally agree this is a tricky situation and you must seek expert advice,just make sure they dont do any legal work for your local council :shock: ,also write to your local MP ,newspaper etc get some bad publicity the council dont like never know it may have an effect nothing ventured nothing gained,good luck :D
By JoeyMorgan
#212637 Thanks CrunchyNut and maccy68 for the input.

Rather importantly, my suspicions are confirmed - I can't somehow 'disown' the flat and wash my hands of the whole thing... a pity indeed! In the US you can apparently send the keys to your property back to the bank, smile and wave at them and move on with your debts and savings intact... Capitalism is much more draconian in this country ;-)

Regarding the rest of the advice, I have already spoken to a solicitor - they ask me for a cool £1200 to just 'read' my lease (28 pages) and write a letter to the council requesting relevant documentation - i.e. copies of surveys and similar.
I'm not sure that the council acted wrongly - it is in my lease that I'm responsible for an equal share in any repair or maintenance works deemed necessary. There is no way out of it.

What I deem corrupt though is the whole system in general and the tender processes in particular that are in place in my (and any other) council. What usually happens is that a job that can be done for X amount of money is tendered for at least 4-6 time the X amount - because there are lists of 'approved' companies that can submit a tender and any other company is deemed 'not upto the requirements and standards' - i.e. not financially stable or not having the right ISO9000 processes in place or whatnot.

What happens then is that a group of building companies 'split' the tenders between themselves, each 2 submitting a higher and lower bid for a given tender and NOT messing with any other tenders. Thus, the council obligingly selects the lower quoted figure, but they haven't that much of a choice, do they. Snouts in the trough anyone?

Oh, and the amounts they bid are very very carefully orchestrated to be as high as possible without raising too many eyebrows.

This is how I am being charged £8500 for 4 PVC double-glazed windows that would normally cost £1700-£1800 and also £13,000 for resurfacing the roof of the block (make no mistake here, the total for the roof work is about £160,000... it is barely 2000 sq f as we are talking about a flat roof in a 12-flat 3 storey high block)

Or how about this charge - and that really ticks me off - £4000 (£48,000 total) for the 'rent' of scaffolding for 16 months!!! Not only the scaffolding could've been bought outright and installed for about £7000, but most of the 'rent period' the scaffolding wasn't used at all!

So there, I said it, is off my chest now ... lemme go and figure what to do now.

Actually, irresponsibly or not, I am willing to cash my ISA accounts spend the money on a fantastic holiday, and declare myself bankrupt after that - let them take me for a £5 per week for the next 3-4 years and clear me of any debts...

I hope you understand - it is not as if I spent the money the council is asking me to pay... it is that I'm being completely and utterly ripped off here...

I never imagined I will be facing financial ruin this way... after being so careful in my spending and making the effort to save over the years...