Divorce, repossession and bankruptcy

newterrain

I am looking for some advice on a complicated situation - I will try to keep it brief! I am currently supporting my brother (financially and emotionally) through an acrimonious marriage breakup. Communication between my brother and his wife is difficult and inconsistent. She has repeatedly misled and lied about issues relating to court proceedings, and there is no trust between the two of them. His wife has just announced that she will be declared bankrupt this week and we are trying to work out the implications, especially in relation to the former family home.

Background: divorce proceedings have been initiated and the ancillary relief proceedings are also underway, a first hearing is scheduled for the end of May. Financial information from both sides (Form E) is due with the court by the end of this week. My brother's wife lives in the former family home but has failed to make mortgage payments and repossession proceedings are now "imminent" - it will be referred to the mortgage lender's litigation department this week. My brother wishes to sell the family home, both to release the small amount of equity in it and avoid repossession. However, over a period of several months his wife has been consistently difficult about getting valuations, discussing the possible sale, etc.

Today: My brother's wife has said that her Form E will be submitted blank to the court by "the company dealing with her bankruptcy". However, she has also now agreed to the house being put on the market.

Can anyone offer any insight into:

a) Why would she now agree to the sale of the house? Is there some trap here that we ought to avoid?
b) Does her bankruptcy offer my brother any opportunities (eg would there be any advantage to him buying her beneficial interest in the property before selling the property himself? He does not wish to live in it).
c) What are the risks for my brother in this latest development?
d) What is the role of this "company dealing with the bankruptcy" - assuming its a debt management company, what is their role?

Sorry to ask such open-ended questions. My brother has been to see his solicitor today and got very little in terms of clear advice. It would be good to get some thoughts from people who have been on the sharp end.

Thanks.

Ineedaname

Hi there, I don't want to read and run but I'm also really not experienced enough to even try and answer your questions.

Have you/your brother taken any advice from somewhere like the CAB? That might be a very good start.

Certainly if the property is repossessed any shortfall will be your brother's responsibility. If repossession has already been started by the mortgage company the property may not sell before this goes through, in the current climate anyway.

Hopefully one of the board 'experts' will be along shortly to provide some more detailed advice for you.

newterrain

Thanks for the supportive reply! He has a solicitor and has talked to CAB but the combination of circumstances seems to be unusual (his solkicitor is a familty lawter, not an insolvency specialst and CAB are more used to people wanting to save their homes not sell them..)

mel12

b) Does her bankruptcy offer my brother any opportunities (eg would there be any advantage to him buying her beneficial interest in the property before selling the property himself? He does not wish to live in it).

If the house is in positive equity, the OR will have an interest in the ex's half of it (or possibly another proportion if theres any agreement by the court as part of the divorce).
He may be able to buy this back from the OR for the amount plus legal costs. This might be beneficial as if house prices rise before he sells the house as he would then be able to keep all the profit when it does sell without having to give half to the ex.

And also means not having to deal with the ex about the house, which might be a benefit if she's being delibrately obstructive. I think he will need to speak to the OR about permission to sell the house. I'm hoping someone more expert can advise on this..

c) What are the risks for my brother in this latest development?

He will now be solely responsible for any joint debt [the whole amount not half. This only applies to things in joint names].

If the house sells for less than the mortgage amount he will be responsible for the whole shortfall.


His credit rating will be affected if they are financially associated (joint mortgage or debts or bank accounts), making it more difficult to get credit. I don't think its possible to put a notice of dissassociation on his file until they stop having a joint mortgage, but I'm not sure. If he needs to find somewhere to rent it may be best to do this sooner rather than later to avoid having problems with the credit check.

d) What is the role of this "company dealing with the bankruptcy" - assuming its a debt management company, what is their role?

Very little - they charge an extortionate rate to help people fill in bankruptcy forms etc. Once a bankruptcy is approved by the court the person's assets etc are dealt with by the OR (official reciever), or a trustee if there are a lot of assets.

AuntyJean

My partner went through exactly the same.

Because he was earning but had no assets the judge decided she should have half his pension. He was also left having to pay of loans taken out in his name because she had no credit rating. It cost her nothing and my partner over £3k in solicitors and court fees (fortunately he was able to pay this in monthly installments). Now the mortgage company is coming after him. In short, she ended up far better off and he is now having to consider going bankrupt as there is a shortfall of circa £25k.

If he can sell the house he would be far better off. Take advice on this aspect from other MSE members.

newterrain

Thank you for the replies - really helpful.

itydntk

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