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!

debtinfo

It seems to me that it is not necessarily your friend ruining your life, If she is going bankrupt then she obviously cant afford to pay, just like you cannot afford to pay. Obviously it is the going seperate ways, or buying it in the first place that has created the situation.

To answer the first question Yes you would be fully liable for the whole shortfall, as for most joint debts the two parties areboth jointly and severally liable for the whole amount. This is what you signed up for when you signed the original mortgage agreement.

For the second question, i cant really say, i presume that you are in scotland, there are a few scotland specialists that post.

sarahjane88

I just wanted to say, debtinfo, that I was and still am able to pay my own half. Because my friend acted stupidly with her finances and lavished on luxuries and clothing, she is now filing for bankruptcy, which means I am left to pay her share too, so yes, I do blame her. She now cares only for herself, and went behind my back changing the bank account details for which the mortgage is paid, to bounce a payment even tho I had an agreement in place with them... you'd understand if you knew her.

zzzLazyDaisy

On a joint mortgage, both people are jointly and severally liable - which basically means that you are not just liable for your half of the repayments - you are both liable for the whole amount. If one person can't pay or goes bankrupt the other joint owner becomes liable for the full debt.

fermi

sarahjane88 wrote: »

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?

Yes.

i was under the impression that her trustee would take responsibility for 50% of it, since its half her debt.

No. Your impression is wrong.

Whereas a trustee would treat any shortfall technically as a provable debt in their bankruptcy, as you are also liable for the full amount it would fall to you.

You are liable for the full amount under the rules of joint & several liability, and their bankruptcy would do nothing to change that.

it seems incredibly unfair that i should pay for her mistakes, and lets just say i went bankrupt too, i'm pretty certain my trustee would refuse to take on more than the fair share.

Fairness has nothing to do with it. Trustees do not take on a certain "share". Your bankruptcy estate(s) would be jointly liable for the full amount, just as you yourself are.

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?

Why would bankruptcy stop you going into nursing?

hth.........

Sunnylooloo

Hi

I know it is horrible and you feel that is has all be landed on you, personally if you can get the flat sold and get it off your hands I would do that as soon as you can. It is good that you have told the lender what is going on and that you at least have some agreement with them (is there any reason why you and your BF and baby can't move into the flat yoursleves? and take it over?)

Sorry I can't really offer any advice but wish you luck and hope you get this sorted.

macman

Do you own the property as joint tenants or tenants in kind?

sarahjane88

Fermi... nursing is the same as the raf/army/professional jobs where they don't take anyone who has been bankrupt because you are considered to be in a compromising position. I just don't know if that also includes trust deeds although I expect it does.

Macman... not 100% what you mean. The flat is empty the now, it has no tenants. I moved out first because my hours got cut and I moved in with my bf. My friend/joint owner moved out sometime after.

Sunnylooloo... I would if I could but it is very unsuitable in many respects. Far too far away from my bf's work, unsuitable for a pram as it is an attic flat and not a reputable area for a family. Be ok for a couple or young friends like were at the time we bought it or something.

bat-out-of-hell

sarahjane88 wrote: »

Fermi... nursing is the same as the raf/army/professional jobs where they don't take anyone who has been bankrupt .

I have helped one raf, and a dozen police officers through BR, and a good BR friend of mine has just got a nurseing job..........

Where are you getting your info from?

bat-out-of-hell

Can you answer please sarahjane88, so far, your thread has stunk of bad advice, so i get the feeling somebody or worse, some company is giving you bad advice to profit from your situation.

FraudBuster

bat-out-of-hell wrote: »

Can you answer please sarahjane88, so far, your thread has stunk of bad advice, so i get the feeling somebody or worse, some company is giving you bad advice to profit from your situation.

Several threads:

https://forums.moneysavingexpert.com/discussion/2493861