Do I try for bankruptcy?

Baz_500

I have an £87K mortgage, taken ouy in 2005 when my property was worth £102K. This mortgage is in my sole name. I was stupid enough to take out a £14K loan from Welcome Finance on a ten year term, as a secured loan on this property with my wife being the second name on the loan.

This loan was really to pay back some of my wife's debts.

Since then, we have separated, with her agreeing (verbally) to meet the Welcome Finance loan repayments, and me paying the mortgage.

Last week, I was told that the Welcome Fonance loan was only being paid at half of the agreed repayment amount. I contacted my wife, who has lost her job. Welcome Finance gave me a resettlement offer of £22K, which seems extortionate as £13k of the original £14k borrowed has been paid back. I have £12k available from a redundancy agreeement. As I am in a new relationship, I cannot afford to pay back the £22k. Should I consider bankruptcy?

beanielou

You cant go bankrupt AFAIK as you have capital.

Baz_500

What would happem if I uded my small capital to pay off some of the debt?

toobefree

Hi Baz,

I don't think bankrupt should be your first option, please do some research first.
*Can you not get someone i to rent with you to help you pay the loan.
*If you have equity as your mortgage company to consildate the loan if possible.
* Diffinately speal to National Debt line.

Your wife did not do a very nice thing, maybe you can take her to the small claims court as a solicitor and get some thing issue out to her, give her a scare.

Good luck

Baz_500

Thanks for your advice. I forgot to mention in my original statement of facts, that I very strongly expect that the current market value of my house is below the original £87K of the original mortgagae loan. I know that my wife's actions were irresponsible, and I guess that as I knew her former financial record was poor, I should have been more alert, but if I can avoid trying to drag the money from her I would. My two children are still with her.

Magnolia

Baz_500 wrote: »

as £13k of the original £14k borrowed has been paid back.

Hang on a minute - am I reading this right? They offer you a settlement of 22k when you only owe 1k?

DVardysShadow

Magnolia wrote: »

Hang on a minute - am I reading this right? They offer you a settlement of 22k when you only owe 1k?

Clearly, this needs looking at. Baz: when did the loan get taken out, what is the APR, what is the payment schedule and what payments have been made?

Baz_500

The original secure loan was taken out in February 2008 for £14K. The repayments over 10 years were £413.48 The interest charged was in the region of 25%. This was caused by my wife having had CCJ before we were married.
The repayments were £413.48/ month over a term of 10 years. They were paid in full until May 2010, when my wife reduced them by half. The local office of Welcome Finance seems to find it difficult to provide exact details, other then a photocopy of the original contract. But I believe that my wife continued to pay until August, when she became unemployed. I estimate that over £13k has been paid back, but this of course does not include any interest. The settlement fee was £21750.

DVardysShadow

Baz_500 wrote: »

I estimate that over £13k has been paid back, but this of course does not include any interest. The settlement fee was £21750.

the 13k which has been paid is mostly interest.

Something is very wrong with this settlement offer. At most you should have to pay 14000 plus the missing installments plus the interest on those instalments.

BigCraigJohn

Welcome are cowboys.
You need to get hold of the agreement and any other details. Really doesn't add up.
You can send a tenner and do a subject access request, this will get you everything they hold.

unhappy_with_ecar

Checking the Welcome loan is the priority and I would seek some proper advice in the matter. Most decent solicitors will offer you half hour or so on the phone for nothing which may help you with some answers that you are looking for.

As far as bankruptcy goes - its a secured loan and so would be excluded from the bankruptcy and as the property has no equity, the Official Receiver would be unlikely to be interested in it.