The acquisition of long-awaited housing using credit funds limits the owner's ownership rights until the full repayment of debt. That is why many are wondering whether it is possible to declare bankruptcy on a mortgage. Despite the fact that maintaining housing after undergoing bankruptcy is very difficult, there are still certain legal ways to defend your home.
Main conditions
The bankruptcy of individuals and mortgages have recently become close terms to each other. At the legislative level, the right of every citizen to officially recognize himself as a bankrupt loan debtor was secured in 2015. It is no coincidence that information on how to declare bankruptcy on a mortgage to an individual is relevant to this day.
To initiate the bankruptcy procedure, the payer of the loan allocated by the bank for the purchase of housing must have a debt of at least 500 thousand rubles. and at least a three-month delay in maturity. These rules apply to the bankruptcy of individuals for mortgages and consumer loans.
However, it is important to understand that this method of solving financial problems is applicable only to one of the existing debts. Let us clarify this point for those who are interested in whether it is possible to declare bankruptcy on a mortgage and, for example, a car loan at the same time. The answer to this question is clear: no, you can only declare your own insolvency on one of the loans.
Most likely consequences
In the event of bankruptcy with a mortgage, what will happen to the apartment? The debtor, who received the official status of an insolvent individual, opens up two ways to solve the problem:
- achieve restructuring of the loan in order to obtain more loyal conditions for covering the debt;
- agree to the procedure for the sale of real estate, which will cover the debt to the creditor.
The first option is safer from the point of view of protecting collateralized housing, unlike the second, which carries a huge risk of being left without property, but at the same time a part of the debtor's mortgage obligations is leveled and interest, fines and penalties cease to be charged.
As court practice has shown, the option of selling the property of a bankrupt is more common. Mortgaged property is estimated to be cheaper by about a third of the initial value in the market, then housing is put up for public auction. The money remaining after the sale is given to the debtor, but if the amount from the sale of the collateral object is not enough to repay the loan, the remaining funds will be calculated from the salary of the bankrupt until the debt is fully paid.
In what cases does the property remain with the debtor
Before asking about whether it is possible to declare bankruptcy on a mortgage, you should once again recalculate the amount of debt. If it is less than 5% of the market value of real estate, in addition, the delay period does not exceed three months, the bank will not be able to select an apartment or house.
How to declare bankruptcy on a mortgage and stay with housing if minor children are registered in it? Some citizens mistakenly think that this fact is a guarantee of the inviolability of the home.Actually, this fact is not an obstacle for banks, however, the insolvent owner's chances of saving square meters will increase significantly if guardianship and trusteeship agencies are involved.
Mortgage Debt Recalculation
Restructuring can significantly reduce the interest rate and increase the term of payment on the mortgage. Is it possible to plead bankrupt and dispense with the sale of collateralized housing? This is only possible when recalculating debt. This operation is carried out in order to restore the solvency of the debtor in relation to creditors, without resorting to the sale of real estate. This scenario may occur if the person in respect of whom the bankruptcy proceedings were initiated is officially employed and receives a stable monthly salary of at least 20 thousand rubles.
In cases where the debt to banks exceeds the value of collateral real estate by several times, the sale of property at auction is an inappropriate decision. In the presence of a large debt, restructuring is more often carried out.
Benefits of Restructuring
What happens if you become bankrupt with a mortgage and restructure debt? On the one hand, the debtor has good prospects:
- there are many chances to keep housing purchased with credit funds in their property;
- revising lending conditions in order to create a more convenient settlement scheme for the debtor, in contrast to the lengthy and bureaucratic restructuring procedure of a person who does not have bankruptcy status;
- the opportunity to avoid litigation with banks in court and maintain the status of a responsible and decent borrower with timely treatment;
- accrual of interest and late fees is suspended.
On the other hand, a more comfortable mode of payments can cause an incredible amount of interest, which will turn participation in the mortgage into endless bondage. The debtor must be clearly aware of whether he can meet the new deadlines at sparing rates. Otherwise, debt restructuring will be pointless and costly.
Sale of mortgage property
The likelihood that the apartment will ultimately be put up for auction is high, but it can also be a way out of this situation. How to declare yourself bankrupt on a mortgage and stay with housing, giving it for sale?
The thing is that collateral is considered problematic, therefore it is sold, as a rule, cheaper than the average market value. In this case, the actual owner is not prohibited from bidding. Thus, the debtor or one of his family members, relatives can buy an apartment at a bargain price. In addition, the process of bankruptcy proceedings itself can drag on for more than a year - during this time it’s worth trying to raise the right amount and save housing, completely freed from credit obligations.
How to declare yourself bankrupt on a mortgage
Before proceeding with the process of official recognition of insolvency, an individual should familiarize himself with bankruptcy law or seek the help of a qualified lawyer. There are several stages of going through bankruptcy proceedings with a mortgage. What will happen to real estate?
Before answering this question, it is necessary to carefully analyze the situation with the debt and determine the appropriateness of recognizing the fact of ruin. A lawyer who specializes in lending and bankruptcy matters will be required in this matter. He will help draw up a rough plan of action and talk about the consequences of recognizing the insolvency of an individual in the presence of a mortgage agreement.
What documents will be required
Now there is no doubt whether bankruptcy of an individual with a mortgage is possible.However, a citizen cannot be considered insolvent only because he calls himself such. Only the judiciary has the authority to make legitimate decisions recognizing the bankruptcy of individuals. What will happen to the apartment and the mortgage in the future also determines justice.
The first step in this process will be the collection of relevant documentation. You will learn about how to make a statement of claim in the next section of the article. In addition to the lawsuit, you will also need a mortgage agreement and a payment schedule, as well as the main documents (provide originals and copies):
- passport;
- SNILS;
- TIN;
- Marriage certificate;
- birth certificate of a child;
- employment history;
- income statement in the form of 2-personal income tax;
- information about property from Rosreestr.
The list of documents may vary in each case, which depends on the amount of debt and the terms of the contract. You can clarify what documents are required to be attached to the claim with a legal adviser.
How to make a statement
The application is drawn up according to the same plan as any civil lawsuit. At the very top, in the upper right corner, the name of the court, its address is indicated. Then, the details of the plaintiff should be described in detail, including the full name, date of birth, place of residence, series and passport number, TIN, SNILS.
In the content of the statement of claim, it is important to explain why it became necessary to go through bankruptcy proceedings on a mortgage, what the applicant will do if he recognizes insolvency, how he plans to pay off the debt. The list of credit organizations and the amount of debts are also indicated. In a statement, plaintiffs are usually asked to appoint a financial manager specifying the amount of the fee, which will be transferred to the bank account of the court.
At the end, all attached documents and the date of the application are noted, after which the plaintiff’s signature with a transcript is put. In addition to the package of papers that are submitted to the court along with the application, it is required to submit a receipt on the payment of state duty in the amount of 300 rubles. The fact of filing a claim is recorded in the corresponding clerical journal. From the moment the application is submitted for consideration, the court is given 90 days.
Court and bidding
At the first court hearing, the judge announces the decision on the appointment of a financial manager and the procedure for the recalculation of debts. The debtor draws up a payment schedule, which is signed by the manager. This document is sent to the meeting of creditors who either approve or reject it. If the lenders still cannot agree, the court will approve the plan by willful decision.
If the bankrupt failed to pay off the debts as a result of the debt restructuring, then the sale of collateral real estate is an inevitable way to resolve the conflict between the debtor and banking organizations. This is the last resort that is resorted to last. If the proceeds from the sale of mortgage housing will not be enough to pay off the debt, then the balance will be calculated from the official income of a citizen recognized as bankrupt.
If the bankrupt is one of the spouses
If the property acting as the object of the pledge belongs to the spouse or spouse of an individual declared insolvent, the family couple may not worry about what will happen to the apartment. Bankruptcy with a mortgage of a husband or wife does not pose any threat only if the housing is not registered in joint property. Otherwise, it is taken into account and included in the bankruptcy estate of the bankrupt person to pay off debts. This decision cannot be made in relation to personal property, especially obtained under a gift contract or as an inheritance.
Bankruptcy of a married couple and maternity capital
In judicial practice, there are many cases where both spouses were declared bankrupt.If they own mortgage housing, regardless of whether they are both co-owners, a legal decision can be made to put the property up for auction. And although the sale of property does not require the consent of the second spouse, half of the proceeds is legally assigned to him. The second part is given to the creditor.
If the marriage is terminated at the time of the proceedings on the recognition of the husband or wife insolvent, the jointly acquired property, including mortgage housing, shall be sold. If there is a surplus after payment of debts, he will be returned to the former spouse of a bankrupt citizen.
There is no talk of any concessions even if housing was purchased at the expense of maternity capital. Lenders have the primary right to receive borrowed money. As for the obligation to allocate shares to minors in an apartment, the purchase of which used the funds of maternity capital, in accordance with the law it can be fulfilled only after full repayment of the debt.