When debt forces you to rent your mortgaged home
If your monthly mortgage payments are leaving you with a long drawn out debt that keeps you awake at night, there may be a solution to help relieve the stress - and help you avoid bankruptcy.
Debt has reached an all time high as inflation erodes at our disposable income and repossessions become the norm. However, there is a scheme which will allow you to still live in your home and pay off all of your outstanding debt at the same time.
The plan involves selling your home to free some capital to pay off debt. You then become a tenant and pay rent. This is not an option many would like to take, but out of desperation, they are being forced into a catch 22 situation to stay in their home.
In theory, this could be another alternative to bankruptcy or repossession. However, it is worth bearing in mind that the price offered for your property could be very low and in some cases, only fetch 65% of its market value. On top of this, there are no guarantees that your new landlord will allow you to rent your home permanently. In some cases, landlords have fallen behind with mortgage repayments and the house has become repossessed by the bank, thus leaving the tenant homeless.
A typical example can be found when an elderly gentleman ran up credit card debt. He decided to partake in the scheme and received £40,000 for a house which would have fetched £165,000 in the housing market. He now rents to the new owner of his home but only has a six month short-term tenancy. This means that he could be made homeless any time after this period with as little as eight weeks notice.
IVA and Bankruptcy News posted on 15/10/2007 10:47:34
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