House Repossession maybe bankruptcy?

Gareth83

My girlfriend and I are looking to buy a house together as she is expecting our first child in July.

The problem that we have is that she has a house with her ex partner (obviously she doesn't live there) that has been up for sale for 14mths.

He is supposed to be giving her x amount of money a week to cover the mortgage and also money he owes her family. He keeps coming short of this so she keeps having to pay it out of her own pocket.

They need to get £102,000 minimum for the house to cover the mortgage and it's arrears (£93,000 including. a £6000 exit fee!!) a secured loan (£5,000) and associated selling fees. They also need to get £2000 to give her grandparents some money.

They also owe £12,000 or so to her family which will no doubt have to be written off.

The problem is that someone offered the £102,000 but the valuation survey has come back with lots of problems and they say it's only worth £80,000 or so.

The house needs to go but certainly not less than the £102,000 as stated.

What are the short and long term implications of allowing the house to get repossessed?

I think it's something that can't be taken lightly and may backfire on us in the future with her having poor credit etc. and may put our home (if we get one) at risk if they try chasing the money.

Would it best for her to just go bankrupt?

Would there be anyway to get out of the £6000 early termination fees?

poppysarah

Why don't you live there? But ex out. Saves him ripping her off.

Of course he genuinely might not be able to afford to pay whta he owes or he might just be taking advantage. Either way 14 months is a long time to sell something so stop trying and move in. Get it revalued now and buy him out.

lukekelly_2

If the house is repossessed then it will almost certainly be sold for substantially less than £102,000 if the valuation survey had the faintest glimmer of accuracy in it. That would leave her and her ex-partner with a substantial debt that would be chased. If you're looking to buy a house do you have significant savings? If not, then there's almost no chance of you being able to buy a house in the present climate. If you have, could you use some of your savings to cover the loss that will be made when you sell the previous property? Sarah's suggestion does sound sensible if that's at all a possibility.

Gareth83

poppysarah wrote: »

Why don't you live there? But ex out. Saves him ripping her off.

Of course he genuinely might not be able to afford to pay whta he owes or he might just be taking advantage. Either way 14 months is a long time to sell something so stop trying and move in. Get it revalued now and buy him out.

I don't want anything to do with the house out of principle, it was something they bought and decorated together and I know it would cause problems in the future.

I wouldn't buy the house anyway as I'm looking for something that 'we' can do up together

Gareth83

lukekelly wrote: »

If the house is repossessed then it will almost certainly be sold for substantially less than £102,000 if the valuation survey had the faintest glimmer of accuracy in it. That would leave her and her ex-partner with a substantial debt that would be chased. If you're looking to buy a house do you have significant savings? If not, then there's almost no chance of you being able to buy a house in the present climate. If you have, could you use some of your savings to cover the loss that will be made when you sell the previous property? Sarah's suggestion does sound sensible if that's at all a possibility.

I have savings to get a house and will be starting a decent job too.

My savings are not going anywhere near her previous property. If they make a loss then they need to sort it out themselves but the only method they can foresee is letting it get repossessed then go bankrupt.

He's not going to be willing to pay when he finds out we're moving in together so the inevitable will happen sooner or later

Pepzofio

I think you're being remarkably short sighted. If it's a case that you don't want to get financially involved in the house (which I can understand, although you say you are planning on buying a house together) just move in & help her out with the mortgage, that way anything the ex pays can go towards the money owed to her family - I'd say making sure that is repaid is a far more important principle than your pride.

If it's just the fact that she used to live there with him - are you going to make her buy a whole new wardrobe/exchange her car/never go anywhere they went together? Yes, the house will have a history for her, but if you're going to let that get in the way of your relationship, then I don't think moving in together is the wisest idea...

It's a sensible suggestion and helps your OH out of a massive financial hole. You can redecorate so that you've made your mark & see to all the 'problems' found in the valuation survey, then once the market picks up again and it becomes viable to sell, you can find somewhere else and make it your own.

If the worst comes to the worst and the house gets repossessed, you're not going to be 'doing' anything up together - unless you can get a mortgage by yourself.

lukekelly_2

If she is repossessed and declared bankrupt then be aware that you will not be able to buy a property together. You will be able to buy a property yourself, but it would yours alone and any mortgage would have to obtained using your financial details only.

Would it be possible to rent the property out and cover the mortgage that way? Or sell the property, convert the arrears to an unsecured loan for hopefully a relatively small amount and repay that debt as quickly as possible.

Your principle -- not living in the house she bought with her previous partner -- seems to me to be a very expensive principle. Particularly as she, whether through bankruptcy or debt, would be the one receiving the financial pain. From what you've written I think it'd be a bad option for her. If she really is the woman that you want to raise your children with and spend the rest of your life with, and I have no reason to think that she isn't, the best option for the both of you would be for you to help her out here, either with cash or buy living in her previous home.

Gareth83

Pepzofio wrote: »

I think you're being remarkably short sighted. If it's a case that you don't want to get financially involved in the house (which I can understand, although you say you are planning on buying a house together) just move in & help her out with the mortgage, that way anything the ex pays can go towards the money owed to her family - I'd say making sure that is repaid is a far more important principle than your pride.

I don't want to get financially involved in the house as I think it'd be a money pit in my opinion. I highly doubt he would agree to me buying him out as there is no money in the house so what incentive is there for him to just sign over the house?

Not only would I have muscled in on his lady I would have muscled in on his house. This isn't a principle of pride this is to do with the fact we live in a relatively small town and it just wouldn't be practical.

If I got tied in financially when it came to be time to sell it'd be us who lost out and not him. Do you really think he'd repay her family when I'm living with her with our baby in 'his' house?

If it's just the fact that she used to live there with him - are you going to make her buy a whole new wardrobe/exchange her car/never go anywhere they went together? Yes, the house will have a history for her, but if you're going to let that get in the way of your relationship, then I don't think moving in together is the wisest idea...

It's nothing like that, as mentioned small community etc.different circle of friends. I could foresee trouble you know like the odd keying of the cars etc.

It's a sensible suggestion and helps your OH out of a massive financial hole. You can redecorate so that you've made your mark & see to all the 'problems' found in the valuation survey, then once the market picks up again and it becomes viable to sell, you can find somewhere else and make it your own.

If the worst comes to the worst and the house gets repossessed, you're not going to be 'doing' anything up together - unless you can get a mortgage by yourself.

Like I said I can get one by myself but I am not willing to do so just yet because if he forfeits his payments then it will essentially be 'us' who have to cough up or let it get repossessed and bite the bullet now rather than later.

But what is the process of doing so?

Debt_Free_Chick

I can understand how you feel about a property that your partner once shared with her ex (been there, done that!) but - in the nicest possible way - you need to "get over yourself" in that respect. It's just bricks and mortar after all and it need not be a long-term home for you both if you don't want it to be.

The alternative - repossession and possible bankruptcy - will cause an equally huge strain on your relationship. And for the next 6-12 years as well. Firstly, her credit record will be shot and this will impact you if you have any joint credit; that includes a joint bank account with an overdraft facility.

Secondly, the lender can continue to chase for the shortfall for up to 12 years after repossession.

The financial implications that result from repossession and bankruptcy are very, very real; very far reaching; and will last for a considerable period of time.

The implications of you moving in the property are simply "your state of mind" and can be overcome if you simply choose to look at things differently.

Detach her previous emotional/physical relationship from the property. The house is no indication of the size of her ex's !!!!!! or his sexual prowess (sorry - but this is all too frequently behind a man's feelings in this situation, no matter how bizarre it may seem). In fact, it probably represents all the reasons why their relationship failed. See the house as (a) somewhere to live (b) a way of saving money, assuming that your joint outgoings on rent and mortgage will be less than they currently are and (c) an opportunity to buy your first home together. If you buy it with her, her ex will then have absolutely no say in anything to do with the property and then - I assume - the final string of attachment between them will be completely severed.

Needs must I'm afraid.

She needs you to be practical and supportive and to provide possible solutions - not lumber her with financial and emotional distress that goes with repossession and bankruptcy. Hasn't she got enough financial problems without those too? And ..... a baby due in July??????

Step up the mark and be a man - better still, be a supportive and understanding partner and not a green-eyed monster

lukekelly_2

I highly doubt he would agree to me buying him out as there is no money in the house so what incentive is there for him to just sign over the house?

If he's currently in negative equity then he has substantial motivation to remove his name from any debts relating to the property. If the house is repossessed they will chase him for the debt as well as your partner. it's possible that he'll ignore his financial interest and go for being a !!!!!!! instead. But there's also a chance that he would follow his financial interest. No harm in finding out which.

Pepzofio

From your posts on other boards, I see that he is currently living at the property with a mate, but does not pay the mortgage direct as he has poor credit & doesn't have a bank account... Does this mean the mortgage is soley in your OH's name? If so, why is she letting him stay there?!

I still think moving into the property yourselves is a sensible idea, as (a) you wouldn't be financially tied to the property (b) as long as everything remains in her name it won't affect your credit (c) it sounds like the ex is unlikely to fulfill his financial obligations whatever happens (d) if you live in a small community then you're going to have the same problems wherever you live - unless you're planning to leave the area?

If you can get a mortgage yourself and are happy to have all bills in your own name, then her going bankrupt will not necessarily affect your credit rating - although bear in mind you can't even get a joint current account together without being linked on your credit profiles. But as other posters have said, she needs to get expert advice from a debt advice charity before going down this route.

There is still the issue of the debts to her family to consider though - how are relationships going to be affected if £12-14k debt has to be written off? Or are you willing to assist OH with repaying this debt? From your previous posts I suspect not, but if the house is repossessed in negative equity & ex is unlikely to repay it, I can't see where else the money would come from...

You've also mentioned that you want to put her name on the deeds as a gesture of your commitment - I don't think this is a gesture you can realistically make given the current circumstances. TBH, you'd be better off getting it all in your name, then if things pan out & you get married your estate would go to her anyway. If not, it'll be less messy in the long run!