Hi there Patricia,

Thanks for posting on the forum.

I understand you own a property which has a mortgage of £50k which has some arrears. May I ask an approximate value of the property? Are you currently subject to a Trust Deed or bankruptcy?

There would appear to be a number of options available to you. You may voluntarily surrender the property back to the lender. This would make it their responsibility to dispose of. This may prove difficult based on the condition of the property as you describe. Any shortfall would be your responsibility to repay following a sale.

May I ask what your position is regard to other (if any) creditors? If you have a level of debt that is no longer manageable then a trust deed for creditors or sequestration (bankruptcy) may be an option for you. This would allow you to manage the debt via monthly contributions from income, together with any equity from assets. This may also allow you to deal at the property by allowing the trustee to deal with it. It may however be something that they would be unable to dispose of. Any equity would be paid to creditors and any deficient would for the secured creditors claim and fall in line with the other debts.

Finally, have you enquirer how much it would cost to bring the property back to a sellable standard?

Do you own anything else of any significant value, Patricia? And do you have any other debts?

Hi Patricia and welcome to the forum,

It sounds like your having a really tough time at the moment especially having to move out of your home due to dry rot and rent another flat.

As Rob has advised you do have a number of options available that could assist you in dealing with the property, the mortgage arrears and also any other debts that you might have.

If you could give us some more information regarding the value of the property and if you have any other assets and also if you have any other debts i.e. loans, credit cards, overdraft etc so that we can build up a picture of your full situation to advise you a little further.

If you have debt collectors pursing you, speak with them to advise about your current situation. It may help in the short term to make small token payments to them if you are really feeling under pressure as this could provide you with some breathing space. This can be a couple of pounds per month. I would also speak with the mortgage company to advise them that you are not living in the property and are unable to support the mortgage payment. Sometimes communication and speaking with the debt collectors/mortgage company can help. Debt collectors will threaten legal action and say all sorts in order to intimidate and pressure you into thinking the worst but rarely do take legal action. Eventually though the mortgage company may raise an action to recover the property if you build up sufficient arrears.

Try not to worry too much as there will be a solution to your problems which is the positive thing.

Thanks for the positive help.
The flat is certainly worth less than 50k, and is probably unsaleable.
There does not appear to be any legal access to the flat, where the dry rot problem originated. Owners are not contactable.
Have spoken to debt collectors and bank. All are sympathetic, and are not pushing too hard.
However the interest is still mounting, and I cannot see any way out.
Have no other significant debt, and also have a job.
Thanks again

You are certainly in an unenviable position, Patricia.

I guess it is likely that the outcome of all of this is that the flat will be repossessed and sold by your mortgage lender, leaving you with a shortfall to cope with. Your options then will be determined by how much the shortfall is, how much you can afford to pay towards this debt and whether you have any other assets to protect.

Hi Patricia,

If in the event that you miss sufficient mortgage payments then eventually the mortgage company will repossess and then look to sell the property (if possible) to try and recover as much of their balance as possible. If they for example sell the property for £30,000 and you owe then £50,000 on the mortgage, you will have a balance of £20,000 to be paid to them. The mortgage company will eventually look for this money from you.

As you will have a debt of £20,000, you have a number of options available. You could come to a repayment arrangement with the mortgage company to pay them back every month until their balance is paid in full. If this was not possible or they were unhappy to accept the monthly payment you could consider a Trust Deed, Sequestration or a Debt Arrangement Scheme to deal with the debts.

It really does depend on how much of a shortfall occurs from the sale. It could be a small and manageable amount or it could be an amount that requires a more formal solution to protect and help you. You could work out the potential shortfall by speaking with a local estate agent or two to establish what they feel the property would sell for in the current market and if it would even be possible to sell this based on your description of the dry rot etc.

Thanks again for your helpful replies.
Hopefully these will be my last questions.

I have spoken again to the bank and they have agreed that I have handed in my house keys. However this will now be dealt with by the credit management team.

There is no formal repossession of my flat, so how quickly will this happen?

I understand that once/if they are able to sell it I will be responsible for the net loss. I forgot to ask, but is interest still being added to the debt, and if so, how do I freeze that?

This has been going on for some months now and understandably the bank does not really want to take back the flat.

Thanks again for your advice.

Hi Patricia

Thgey will possibly start formal repossession proceedings and you will be given the option to sign a form to voluntary allow repossession. This will allow them to avoid the normal legal process and costs.

I'm sure they will continue to add interest and charges and your only option at this stage would be to discuss the position with interest.

Hopefully they will begin the repossession process shortlya nd things can move forward.

Mark