bancrupt friend crippling me

sarahjane88

Ok, I'm in a very grim situation, and I know it isn't looking very good. I was hoping somebody would be able to give me advice on what I can do now to protect myself and be the least damaging.

The situation:

I have a joint mortgage with a friend. Neither of us stay at the flat as we went our separate ways. She maxed out overdrafts and took out loans and is now filing for bancruptcy. I have spent money trying to decorate the flat for sale and deal with repairs, damp reports, home reports etc. It is on the verge of going on the market. We expect negative equity of around £10,000. She is not paying any bills (as advised by her debt advisor to kick start bancruptcy) and refuses to help me pay anything, despite getting ready to start a new full time job June/July and earn much more than me. I can not afford to let the whole mortgage be signed over to me as is usually offered in such unique cases.

I am in an agreement with the bank to make part payments after informing them about the situation, trying my best to pay what I can. I am hoping this can continue until the flat gets sold.

Question:

1. After consulting the CAB I was advised that since my friend is applying for bancruptcy the FULL NEGATIVE EQUITY could fall to me. Is this true? I was under the impression that her trustee would take responsibility for 50% of it, since its half her debt. It seems incredibly unfair that I should pay for her mistakes, and lets just say I went bancrupt too, I'm pretty certain my trustee would refuse to take on more than the fair share.

2. If I have to pay everything which I won't be able to afford, I might need to look into a trust deed or bancruptcy. What one is best for me? What is least damaging after everything is taken into consideration, ie. repayments/blacklisting etc. I want to study to be a nurse next year - I know if I want to be a nurse I can't go bancrupt but does anyone know if they exclude those with trust deeds?

If you need any more information let me know. I am working 16 hours, min wage, co habiting with boyfriend, our baby boy and his parents. I have no other debt. Other than making one hell of a bad judgement call on buying that flat I am good at keeping my finances in check. It sickens me that my friend has destroyed my future.

All input appreciated!

Trollfever

After consulting the CAB I was advised that since my friend is applying for bancruptcy the FULL NEGATIVE EQUITY could fall to me. Is this true?

Yes. Check out joint and several liability.

You may like to post on the Bankruptcy Board for further advice.

P.S.

We have met before!
https://forums.moneysavingexpert.com/discussion/2330473

Annisele

If your friend is bankrupt/about to go bankrupt, then she's not allowed to 'help you pay anything'. She's not allowed to prefer one creditor over another - so if she's not paying anybody, she can't pay the mortgage lender.

As Trollfever says, when you agreed to take out the mortgage with your friend you would have agreed to joint and several liability (no other way to take out a mortgage afaik). That means that, initially, the lender could have chosen to go after you for the whole debt, her for the whole debt, or both of you together. Once your friend declares bankruptcy, the lender might get some money from the Official Receiver - but the entirety of the shortfall will fall to you.

Are you absolutely certain that you can't work as a nurse if you're bankrupt? The Nursing and Midwifery Council's website seems to suggest that it wouldn't be a problem in the absence of associated criminal proceedings.

sarahjane88

Thank you Annisele, I read the link and it seems like good news! Only thing is it means I can still register, but would I get hired?

Debt_Free_Chick

Can you switch your existing mortgage to an interest only basis, until it's sold? This would reduce your repayments and could make your finances more manageable.

If you can't, then arguably, your share of the (negative) equity is less than 50% as whilst you've been making repayments on your own, you've been paying off some of the capital, but your friend hasn't. You may want to consider informing your friend's OR/Trustee about this, although I'm not sure whether you will ever get any money back, unless your friend "has a conscience" and comes to a voluntary arrangement with you after he/she's discharged from bankruptcy.

Horrible situation for you.

Annisele

Replied to the OP's other thread.