notorial dissent wrote:If our little quail's comment is true about "got rid of the mortgages" then I would suspect that the properties will all soon be in foreclosure.
I'm guessing that what has happened is this. In Crabby's tiny mind, he thinks he's "got rid of the mortgages". The Trustee has probably told all the lenders that the mortgages are now part of the bankruptcy debts, and the lenders will have written to Crabby to confirm this too. As they're secured debts, they don't get written off. Presumably the Trustee was expecting the tenants to pay the rent to him while he decides what to do with the bankrupt estate, which assets to liquidate, which to retain in the expectation of returning them to Crabby once the debt is paid. But as we know, Crabby's got his mate to act as 'letting agent' and collect the rents for him. So he thinks he's got no mortgages, but free rental income. All he's actually got is a rude awakening coming his way.https://www.nationaldebtrelief.co.uk/nd ... ankruptcy/
The bankrupt’s estate vests in the trustee immediately on his appointment taking effect or in the case of the official receiver, on his becoming trustee. The trustee can disclaim any onerous property and any property in significant negative equity would be regarded as onerous property.
Property with equity of up to £1,000 – deemed de minimis – can usually be bought back from the trustee for a nominal sum. It is not uncommon for the family of a bankrupt to buy back such a property on payment of £1 plus the official receiver’s costs of £211.
If the equity in the property is in the range of £1,000 to £5,000 then the trustee may seek to register a charge on the property rather than trying to realize this equity by having the property sold, with the risk that the sales price might not reach market value and that the equity realized might not cover the cost of sales.
If the equity in the property exceeds £5,000, the trustee may seek to sell the property and to realize the equity for the benefit of creditors and to pay the costs of bankruptcy. The bankruptcy laws deal in great detail with the rights and duties of the trustee and the bankrupt and the rights of other parties such as the bankrupt’s family and of creditors.
Where a bankrupt owns one or more ‘Buy to Let’ properties it appears that there has been a relatively recent change in the attitude of some trustees to the treatment of such properties. Historically where there was little or no equity in such a property, trustees allowed the bankrupt’s family to ‘buy back’ the property and allowed the bankrupt to manage the letting of the property and the servicing of the mortgage. Any surplus income thus generated would constitute part of the bankrupt’s disposable income and be subject to an income payments order. Thus the trustee would receive payments from the bankrupt for up to three years.
More recently, it appears that some trustees seek to seize control of such ‘Buy to Let’ properties and to assume all responsibility for them: receive all rental income; pay the mortgage and all associated insurance & maintenance costs; deal with all letting and tenant issues and take all the day to day decisions relating to the properties. Should the properties go into significant positive equity in the first three years of the bankruptcy, the trustee would also be in a position to realize the equity prior to the property re-vesting in the bankrupt debtor. The motivation for this change in approach by trustees is unclear unless they expect to improve the returns for creditors by taking such action.