Help & Advice - Mortgage Shortfall

AuntyJean

Where to start?

My OH and I have been together just over three years. He and his wife divorced in 2008 with some debts but as she was out of work...... she ended up with half his pension being his only asset and the house was repossessed with a shortfall of over £32k.

He has managed to pay off all debts apart from the mortgage and we thought we could start again but the mortgage company has now appointed solicitors (Morgan Stanley - Optima Legal) to pursue the arrears.

Had first letter today requesting payment and response by 25th May.

House we live in is in my name only with £80k mortgage.
OH has no assets, doesn't drive or own a car. Has a good job (circa £27k pa net) only possessions is clothes!

What advice can you give please? Step by step guidance would be very much appreciated. Did contact Debt Helpline but confused by all the advice given over the phone and all the forms and leaflets.

kepar

Looking at the figures could he not come to some agreement to pay the debt off monthly.

To be honest unless they want the full amount and are going to make him bankrupt he has no other choice.
He cannot chose to go bankrupt as he is not insolvent.
So I suggest he comes up with a plan to repay them monthly.

AuntyJean

Why can't he choose voluntary bankruptcy? National Debtline didn't say anything about having to be insolvent?

Penelope_Penguin

AuntyJean wrote: »

Why can't he choose voluntary bankruptcy? National Debtline didn't say anything about having to be insolvent?

To file for bankruptcy, you have to be insolvent - that it, you owe more than you own. If he has no assets, and owes £32k in mortgage shortfall, he is insolvent and can file for bankruptcy.

Was the house and mortgage in joint names? If so, after he files for BR, his ex-wife will become responsible for the whole of the outstanding debt.

Alternatively, he can negotiate with the creditor and make monthly payments. If he has assets, or a job that precludes him from filing for BR, an IVA may eb appropriate.

Good luck

AuntyJean

His ex wife is not working and also has no assets.

I am trying to work out a personal budget using the sheets from National Debtline but don't know where to start as he is living with me (we are not married) and we are both working. He pays me 'housekeeping' and all the bills are in my name (including my mortgage) except the water rates.

Can anyone advise please?

kepar

AuntyJean wrote: »

His ex wife is not working and also has no assets.

I am trying to work out a personal budget using the sheets from National Debtline but don't know where to start as he is living with me (we are not married) and we are both working. He pays me 'housekeeping' and all the bills are in my name (including my mortgage) except the water rates.

Can anyone advise please?

From what I can gather from above is that you want him to go bankrupt.
The problem is , he brings in a lot of money.

if he brings in £27k gross as you say, that is about £2250 a month, even if you can sort the figures out to give you £1250 a month, he will still have £1000 a month spare.

If he goes bankrupt this £1000 will be taken by the OR in the form of an IPA. An IPA lasts for 3 years. So 36 payments of £1000 =£36000.

So he will pay basically what is owed and will have a bankruptcy against him.

Unless you have no income and he pays for everything , I think he needs to find a way to pay it off monthly.

fermi

AuntyJean wrote: »

He has managed to pay off all debts apart from the mortgage and we thought we could start again but the mortgage company has now appointed solicitors (Morgan Stanley - Optima Legal) to pursue the arrears.

How recently did he pay off his other debts and how much were they in comparison to the shortfall?

Have you checked how the shortfall is made up and that the property was sold for a fair value?

Have National Debtline recommended bankruptcy? It seems to be a bit of a big leap this soon.

Penelope_Penguin

AuntyJean wrote: »

His ex wife is not working and also has no assets.

I am trying to work out a personal budget using the sheets from National Debtline but don't know where to start as he is living with me (we are not married) and we are both working. He pays me 'housekeeping' and all the bills are in my name (including my mortgage) except the water rates.

Can anyone advise please?

He can prepare a personal budget based on just his income. His expenses will be what he pays to you for board, then his personal expenses, such as travel, clothing, phone.

Just because his ex isn't earning and has no assets just now, doesn't remove the fact that if he files for BR, she will be left with the whole debt. Similarly, if he keeps paying, the creditor will let him pay the whole lot, and she may end up paying nothing.

AuntyJean

kepar wrote: »

if he brings in £27k gross as you say, that is about £2250 a month, even if you can sort the figures out to give you £1250 a month, he will still have £1000 a month spare.

If he goes bankrupt this £1000 will be taken by the OR in the form of an IPA. An IPA lasts for 3 years. So 36 payments of £1000 =£36000.

So basically, he will be paying this off the rest of his life? He is 52! Then have nothing to show for it and his ex gets off scott free! Help......

alastairq

AuntyJean wrote: »

So basically, he will be paying this off the rest of his life? He is 52! Then have nothing to show for it and his ex gets off scott free! Help......

well...not quite....


this is the downside of divorce, shared property, etc....and should perhaps have been considered before entering into a partnership?

But few of us do that, eh?

From what you say...apart from the shortfall, your OH has actually survived and come out 'smelling of roses?'

He has you, for a start?

A very lucky man?

Follow Fermi's advice first....[ if only to establish whether the 'debt' is arguable or not?]

Before he considers BR, remember, BR actually leaves a financial stain on a person...for life....as it happens...not just the 6 years it remains on one's credit references.

A quick scan through the threads on this forum will elicit much of the downside of BR.

Which s not to say it's fair...at all.

AuntyJean

So, his choice seems to be:-

a) pay £625 to go bankrupt, and let the court decide what amount he could pay which would cease after 3 years.
b) make an offer and pay off what he feels reasonable for the next 13 years.

Is that about it in a nutshell?

How come the one who works hard to pay off his debts gets lumbered with more when the one who sits on their backside and does nothing gains?

Life just ain't fair.