Joint secured debt with ex wife how do I /debt stands?

bionic_dad

Hi All

After getting divorced, a secured loan against the former marital home was not paid off from the sale proceeds of the house. This was an oversight by ex's solicitors. Ex has defaulted on paying her half on several occaisions but is now filing for bankruptcy. She says the receiver isnt sure on the outcome of this debt being taken into consideration?

Anybody have any experience of this situation? The debt is now in the hands of debt collection agency due to the defaults.
Is it at all possible that the outcome would be either the debt is wiped completely or not at all due to the nature of it?

any advice gratefully received thanks in advance

Bionic dad

peachyprice

Hi Bionic Dad,

Is this now an unsecured loan, I presume so as neither of you own the house it was secured on? Did you both sign an agreement that this is now an unsecured loan?

In normal circumstances any joint debts will fall in their entirety to the non-bankrupt person. And secured loans do not form part of bankruptcy unlesss the house is repossessed.

However, has you solicitor been negilgent in not paying off the loan if neither of you own the house?

JCS1

Agree with Peachy - why not speak to a local lawyer (one of those who has free one hour consultation) and see if there is a case against the solicitor - they should have professional indemnity insurance to pay out in these circumstances.

bionic_dad

No the loan hasnt been released and is still secured against a property neither of us own. Should make for an interesting time when the current occupants decide to ask for the deeds...

As far as the solicitor goes he did state we'd both had the benfit of the funds from the remaining equity from the sale. Enough to clear the charge. I took it up briefly with the Law Society but didnt get anywhere so stupidly I left it.

All my share of the remains of the sale went on clearing debt and didnt leave me enough to clear the loan when said solicitor asked for a cheque three weeks after completion in favour of the building society...

many thanks for your advice - Can I take it then that secured loans are not taken into consideration?(pardon my ignorance) in the bankruptcy process?

peachyprice

No, secured loans aren't included in BR, but your isn't secured anymore as you don't own anything for it to be secured against, so it will be included.

Another way to look at it is, if you have a secured loan and the house is repossessed but not sold for enough to cover the mortgage and loan, as soon as you are no longer the legal owner of the house the loan reverts to unsecured. If you are not BR they loan company can chase you for the shortfall and convert it into a personal loan, if you are BR it will be included in your BR.

Regardless of what the solicitor has said, I would imagine he still had a responsibility to pay of the secured loan before releasing the reamining proceeds to you.

peachyprice

Yes, tibtib ir correct.
Sorry I lost sight of who was going BR.
As it's now an unsecured joint loan if your ex goes BR it will fall entirely to you, unless you go BR too. Unless of course the secured loan company take it up with the conveyancing solicitor who should have made sure they got paid.

bionic_dad

or guess I could hope that the reciever writes whole debt off???

nervousmother

bionic_dad wrote: »

or guess I could hope that the reciever writes whole debt off???

Thats not for the OR to do im afraid, They just say your ex is not liable for it so the company will then chase you for the whole amount.

bionic_dad

ok well i'll see how it transpires after ex's hearing? I can't afford to pay anymore than I am so if thats the case the debt company can take my sob story back to the building society and perhaps they'll take it a bit more seriously this time - thanks for al your advice always much appreciated

sieve

Good luck however it pans out BD.

skylight

Just wanted to confirm what others have said.

In BR, its the liability to a debt that is written off - not the actual debt. So, for a joint debt, your exs liability will be removed leaving the other party fully liable for it.

I would try again with the law society. And I do hope that it all works out for you.