I have two mortgages secured on my property valued at £100K My first mortgage is with C & G with £82K remaining. My second mortgage of £43K is security on a business loan with Lloyds TSB of which I am about to default due to business failure. I am about to declare myself bankrupt (due to other problems!). Has anyone had experience of negotiating a settlement with banks regarding this type of security. I need to keep my home above all else.

Thank you. James.

-- James (james@parotcards.com), December 12, 2001

Answers

I'm not qualified in any way to help or advise you but I would comment that my brother in law was in a simular position in 1988. He had a mortgage and secured business loan which exceeded the value of his house, his business had ceased trading and he was about to be made bankrupt over personal debts.

He spoke to the CAB and they advised him to consider renting a house before he went bankrupt. (because its very hard to rent a house once you are bankrupt) When he then went bankrupt he almost immediatly lost the mortgaged house, since the secured loans exceeded the value of the house and he could not keep up the monthly payments. He was not working at all and quite ill with stress over his business failure, but he was able to move to the rented property. He was also able to control the sale of the mortgaged property to a degree so as to get the best market price rather than it being a forced sale. Not that it made any difference at all at the end of the day.

And, since he was now renting his new house he was able to apply for assistance with his rent & council tax payments as he was not earning anything.

Based on my brother in laws experiance I don't see how you can hope to retain your house. The secured lenders will immediatly force its sale if you do not keep up all monthly payments, and I doubt that the court would allow such mortgage payments anyway. (But if you have children under 16? living at home there are different rules I think)

And don't let any of this get you down. Like any number of people my brother in law was eventually discharged from his bankrupcy, he started a new business, bought a new house with a new mortgage and is today doing very well. He said to me the other day that he has a yearly turnover of 5 million pounds and employs ten people. Today you have a problem, but its not the end of the world. In five years time chances are that you will look back at today and wonder what the fuss & worry was all about.

I hope my comments about my brother in laws experiances are of use to you but I would urge you to discuss your situation with the CAB ASAP. They are experianced in dealing with such situations and can better advise you.

Good luck.

-- anon (i.hate.abbey.national@another.com), December 13, 2001.