Any way around this mess? - Mortgage shortfall if to sell

cottlad

Cliffnotes:
My current wife bought a property with ex partner 10 years ago. 4 years ago they split and agreed to sell. The asking price was an unrealistic 295k. They had bought for 150k. My wife knew about some remortgaging but had left things in ex's hands as he was a FA (in both senses.) She thought the mortgage stood at about 220k but was upset to find out he'd remortgaged (once without her knowledge) to 270.5k Nearly all had been spent on failed business ventures.
Anyways, 4 years ago ex was skint and couldn't afford mortgage so asked my wife to get a loan for 5k to cover things whilst he got back on his feet (he had something about to mature and things were lookin up.) She was already paying everything from her wages up to getting the loan. They had already split up by this point but co-inhabiting until the place sold. Unfortunately my wife is FAR too trusting and kind.
On top of all this the ex had Huntingdons disease, a slow, degenerating terminal disease.

So she got the loan without my knowledge (we'd been seeing each other for couple months after knowing each other platonically 15 years previously) and shortly after the ex moved back to his Mums after realizing things weren't going to improve financially leaving my now wife with the mortgage and her loan.
Shortly afterwards i returned from an overseas job and moved in with the intention of helping out until the place sold. That was nearly 3 years ago and the place still hasn't sold. The ex hasn't contributed a penny and has filed his own bankrupcy which is currently within the courts (so he says.)

So we've spent all our savings and are still paying a huge (for us) mortgage in order to stop my wife defaulting and being dragged through the courts.

We dropped the price to £279k and were prepared to take offers 265+ If sold, with agents fees and legals we would owe approx 274k so we'd have a debt to pay back to family who could pay the difference.

I have another property that until recently was rented out. Those tennants moved out and i've just spent 12k of my Dad's money (i owe him) making the place inhabitable again and we are due to move in soon with our 16 month old baby.

So.......... today we received our 1st offer on the house in 4 years. The offer is 250k + 6k for furnishings etc. Obv the potential buyer didn't want to overstep the 250k threshold for stamp. This is her final offer. This would leave an 18k shortfall

My questions are about our options, if any?

-Is it worth speaking with the mortgage company to explain the situation and see what they suggest?
-Can the ex be held responsible for any of the debt considering he has a terminal disease, no income, and is going through bankruptcy?
-Is it worth walking away, considering my wife is not currently working/earning? She really doesn't want a black mark
-What can the lender do if we walk? Can they chase her for the full debt?
-Would my wife be responsible for the full difference in debt should we accept 256k (if it were possible) or would the ex have responsibility?

This is really getting us down now and we can ill afford 2 mortgages. It seems that the ex (although he has other problems) has been able to step away from the whole mess without worry.

Basically we are trying to find out what options we have?

Any suggestions greatly appreciated.

BitterAndTwisted

So they divorced but the matrimonial home was not part of their divorce settlement and they continued to own it together and still do?

What equity do you have in your ex-rented property and could that be remortgaged to provide funds for the shortfall?

cottlad

They were never married but yes, they are joint owners on paper.
There's about 50k equity on my property but i really wanted to avoid that if possible. I was going to use that option to pay my dad back 12k once were were moved in plus another 8k or so for more building work/drive/fencing etc.
I have considered it however and i suppose it could be a last resort option. That's if we could get a mortgage as my wife isn't working at present and neither am i, although i do have an unguaranteed income. I play poker and am really struggling to earn enough to keep us afloat. I have done for the past 3 years but now find myself 'working' 70 odd hrs/week and going rapidly insane lol. Anyways, the re-mortgaging may be a problem. The other property is probably worth around 135k with an 84k mortgage.

Fang_3

May I suggest that she get a job and face up to her responsibilities rather than live off of your gambling?

Trollfever

Bankruptcy.
Search here:
http://www.insolvency.gov.uk/bankruptcy/bankruptcysearch.htm

Mortgage Shortfalls:
Information here:
http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=11_mortgage_shortfalls

silvercar

Your problem is that you are unlikely to get a higher offer than you have due to the stamp duty threshold and you won't be able to sell unless you come up with a way of paying off the shortfall.

Ideally your partner and the ex could take out separate unsecured loans to fund the difference. The lender doesn't care who comes up with the money and would chase either or both should you default (by which I presume you mean walk away and allow the property to be repo'd).

Your partner has more to lose if the ex intends going bankrupt - though ex's often suggest this to get let off the hook.

GDB2222

In answer to your questions:

1. Your wife and her ex are 'jointly and severally' liable for the entire mortgage on the property, so each of them is liable for the whole of the debt. From what you say, it seems unlikely your wife's ex will pay anything, so she owes the lot. These are not your debts - you owe nothing.

2. If you say £295k was 'unrealistic' at the peak in 2007, £256k doesn't sound too bad right now. If you move out, your wife will still be liable for the council tax and other outgoings until the house is sold. Accepting £256k would then settle the amount of her debts - she'd owe around £18-20k. Be aware that if wife's ex really is bankrupt you'll be dealing with his trustee in bankruptcy. You need to get in touch and sort that out ASAP.

3. It's really up to you whether you let your wife go bankrupt for £18-20k. Bankruptcy gets rid of the issues surrounding the house once and for all, it's not all that awful, but it's outside most people's comfort zones and it may bar your wife from some jobs. In some ways, bankruptcy is the easier option in this case, as your wife doesn't have to get involved in selling the house at all . She simply eaves the whole mess to the professionals to sort out. So, I'd regard bankruptcy as an alternative to selling the house. I wouldn't try to sell it and then go bankrupt.

I hope it works out ok.

cottlad

Fang wrote: »

May I suggest that she get a job and face up to her responsibilities rather than live off of your gambling?

Thanks for that. She's spent the last year raising our baby and is ready to get a job as soon as we move. The move is >70 miles away so getting a job now is pretty pointless.

cottlad

Hmm he doesn't seem to be on the bankrupt register.
There is also a joint account that's been in the red for some time which he's promised to pay off. The bank have said they can't take my wifes name off the account until it's in the black. Is there anything i can do about this to stop us being chased for another hunk of cash?

cottlad

If my wife filed and succeeded in making herself bankrupt would she be chased for cash in the future? Can they say take a percentage of future earnings? Or once bankruptcy is confirmed does she start back at zero with nothing owed? Sorry if these q's are dumb...... i'm reading through some literature at the moment and will probably be a bankruptcy expert soon lol.

cottlad

sry if another silly question but would it be worth calling lenders and saying 'we got 256k for you and we're willing to put in another 8k from our side to be free of the debt. The alternative is bankruptcy.'?