the4ofus

Hi All,

At the weekend I met up with an old school friend on the Gold Coast. She is living here in Australia on a defacto visa and is due to get her permanent resident visa early next year. At present she still has her house back in the UK, however she is now in approx. 80,000 GBP negative equity and also has to send money back every month to meet the mortgage repayments as the rent she receives does not cover the payments. She feels like she's getting nowhere fast and is talking about handing her keys back to the bank but the only thing stopping her at the minute is how this will affect her permanent resident application. Can anyone advise me on this matter so that I can let my friend know.

thanks

Lynn xx

Pollyana

As long as she is still in the relationship that's all that matters.
DIAC will send her a couple of forms just before her PR is due (so she must keep them informed of her current address) but they are forms asking about the rel'ship, and they may want t couple more Stat Decs from people to say its ongoing, like she would've provided for the Temp Spouse Visa.
Financial situation won't come into it

the4ofus

Thanks so much for the quick reply. I'll let her know, I'm sure it will lift a huge weight of her shoulders. She is in a relationship so can prove that with bills etc.

I'm going to phone her right now

Thanks again,

Lynn xx

odyssey

Hya Lynn, give me a call if you like - do you have my number? or facebook me. My brother did a similar thing....

But as the other poster said, financials arent what its all about.

Viv

Bix

If she is willing to hand back the keys I would suggest she tries something else first.

She tells the lender how much she can afford to pay each month (which may only be the UK rent amount) and let them decide if they will accept it by extending the mortgage term.

If they accept she still has the prospect of cashing in some day in the future so all she has already paid will not have been wasted.

odyssey

This link helps: http://www.bdl.org.uk/images/11_mortgage_shortfalls.pdf

JAJ

As others have said, handing the keys to the bank doesn't get rid of the mortgage liability. And in fact, bank will sell house for a low price and make lots of "administrative" charges that will get added on to the debt.

If she has a reasonable income, then the best option is to keep paying and in fact, do her best to trim her lifestyle in order to reduce the amount of the debt. If she has other assets (eg another house) she should consider selling these to reduce the debt.

If she has no income and no other assets, and hence no hope of clearing the debt then there are at least three options:

1. Bankruptcy - this effectively clears all debt (and assets) and she starts again at zero. It's a drastic step that can have long term consequences, especially for certain careers. Also she would need to find out if going bankrupt in Australia extinguishes UK debt.

2. Individual Voluntary Arrangement - "bankruptcy light", again the idea is that creditors are forced to take a write-down on what they are owed in return for a payment plan

3. It's possible to negotiate with the lender to accept a lower amount than the face value of the debt, in "full and final settlement". If the lender accepts, in writing, keep evidence of the offer and settlement for the rest of your life. (because you will still probably find a debt collector looking for you some day).

The worst thing you can do is "hand back the keys" and ignore the debt.

Steve2009

If she's in an 80k hole then she is a long way from a pay day and she may get even further into the hole in the mean time. I'm trying to be polite about this post so I will leave it there.

What happens if she defaults? Can she claim bankruptcy in the UK? (As she is now non-resident)