1. What is Negative Equity?
What exactly is Negative Equity and how do I know if I am affected by it?
What is negative equity? It's very important to keep this really, really simple. Negative equity occurs when the value of your asset, for example your house, is worth less than the mortgage that you have on that property.
As an example, if owe the bank or a mortgage provider £100,000, and the property is worth £80,000, your negative equity position will be £20,000. That's what negative equity is.
2. What is a Debt Shortfall?
How do I know if I will have a debt shortfall post the sale of my house? What can be done about this debt to the bank?
What is a debt shortfall and what is a shortfall sale? Speaker 1: All right so to explain this I want to use an example. If you have agreed with the bank to sell the property, okay, and the bank is owed say 100,000 pounds, and the property makes 80,000 pounds, the debt shortfall will be 20,000 pounds. So whenever we talk about debt shortfalls we're referring in that example to the 20,000 pounds which has been crystallized from the sale which then becomes an unsecured debt.
3. Why should I talk to GDP Equity Experts?
I think my financial problems are beyond help, so how will GDP Equity Experts be able to help me?
Why GDP? Well, over the last four years, we have built up an outstanding team of professionals who are totally independent, and we don't work for the banks. Okay. We're totally independent and we don't work for the banks. What we've been able to demonstrate particularly in the last two years is that GDP is the market leaders in this whole field of mediation. Okay. We don't try and force people into one option, or the other option, or another option. We take an independent view, and we advise on the best solution for that particular party of whatever scenario or example or situation they find themselves in. We're proven, we've got the results to back it up, and we are the market leaders in this industry.
4. What is Mediation?
The bank have asked me to repay all the money I owe them post the sale of my house but I do not have enough money to repay my debt. I have heard that I could settle for less money but I am not sure exactly how this happens; is this Mediation?
What is mediation? Okay, GDP partnership propose mediation as a solution to your debt challenges. So what we do then is that we act on your behalf, we analyze your financial position. And then we engage with your lender, we engage with the bank, and try and accomplish some form of solution struck workout with them on your behalf. That is mediation.
5. What is Consensual Sale?
Why should I try and sell my house myself rather than hand the keys back to the bank? Wouldn't handing back the keys be easier?
What is a consensual sale? Okay, three years ago we sat in a bank in Belfast and explained to the banks the benefits of a consensual sale, right? So a consensual sale is where the borrower and the lender agree to sell the property and maximize the return. No need for receivers, no need for lawyers. You're reducing the costs and you're also trying to explore and get the market value for the property. Of course, you need somebody to mediate that situation and that's what we do. However, that's what a consensual sale is.
6. What options do I have to help with my debt problems?
I thought my only option was to go bankrupt, why is this possibly not the best option for me? What other ways of dealing with my debt are available?
If you find yourself under a financial duress and you're struggling to pay your bills, you've typically three ways to deal with that. You can go down the formal route, which is through the bankruptcy, explore that option, or an individual voluntary arrangement, explore that option. Or you can go the informal way, which is through mediation. But ultimately we see it as three options. You can do mediation, you can do an IVA, or you can explore bankruptcy. One, two, three.
7. Will I lose my home?
My main worry is losing my home. I need to protect it as best I can but I am unsure how to do this. Can GDP Equity Experts help me or is giving up my home my only option?
Okay so you're in financial duress okay, and the big question we always get is do I have to sell my home? Will I lose my home?
Well you might lose your home, or you might not lose your home. The important point is that what we try and do is work out your financial position, is their equity in the home, is there not equity in the home? Who owns the equity in the home, that's important. Because even in bankruptcy there are many examples whereby people do not lose their homes.
So the bottom line is, you may lose your home, you may not lose your home, but it's incumbent upon you to educate yourself around the information and the solutions, and the answers to those types of questions.
8. Will my credit rating be affected?
I am worried that my credit score is going to be irreparable after I have mediated with the bank as I have missed many payments. Is this always the case or can I repair it?
Will my credit rating be affected? Okay, we get this question a lot. And the simple answer is this, if you have a credit arrangement with anyone, via a credit card or a mortgage or whatever, and you stop paying or you fail to pay or you're not a great payer, then your credit rating will be affected. However, the interesting thing is that if you settle with your creditors then there's an obligation for your credit file to be updated as settled and that is something that a lot of people aren't aware of. So, absolutely, your credit rating will be affected if you do not pay. However, if you do settle, which we try and do at GDP with the lenders, then your credit file should be updated and settled, which is obviously a lot better.