House unsuitable - is repossession a viable option?greenspun.com : LUSENET : Repossession : One Thread
My sister in Law & her husband have a mortgage of about 10 years on a small 2 bedroomed house which is worth about #20K less than they paid for it - the problem is that they are in financial difficulty and have 3 small children so the house just isn't big enough and is in need of alot of work - it has no heating for example. We wondered if they would be better off asking that the house be re-possessed and then rent a more suitable property? What would be the best course of action for them to take in this case? How much of the debt would they have to pay back?
-- Angie Vale (firstname.lastname@example.org), August 31, 1999
Unofficially lenders will usually settle for 5-8% of the debt, although you can reduce the settlement to nothing if you force the lender to prove it played by the legal rules. That is what this site is about.
As for whether they would be better off handing in the keys... who can say? It depends on many things, most of which are referred to in the site: earnings, disposable income, employment status, your ability to withstand mental stress.
My personal view is that you should only hand in the keys or submit to repossession if you cannot - and know you never will be able - to pay the mortgage off. I don't think repossessing because the house is uncomfortable is fair to the lender.
-- Lee (email@example.com), September 11, 1999.