complicated and nasty situation

pariskate

I have a friend in a dreadful situation and we're trying to work out how things work...I'm really hoping that you may be able to explain/shed some light/come up with some ideas?.

Until last Easter she was married with two dependant children (teenagers), a house worth about 100k with a 55k mortgage. Her husband worked full time and she worked part time (both on lowish wages).

The marriage broke up, the husband left and then declared himself bankrupt.

It transpires that a loan that my friend believed was for about 20k (for a car and extension) was actually for 90k, secured against the house, with Barclays Ireland (the mortgage is with Nationwide).

The husband had done all the arranging for the loan but it is in both names and my friend is second signatuary (yes, she was naive enough, perhaps, to trust her husband!).
The husband may have misled Barclays (or why would they have given him 90k on a house with only 50k max equity)

Since last April, none of the 90k Barclays loan has been paid. My friend has paid the interest on the mortgage. She agrees that she had the benefit of 20k - it's her car and extension. The house and mortgage are in join names. they are getting divorced.

The questions we have are that everyone keeps telling her to hang onto the house, stay put, pay a bit each month. But it's not an asset anymore, infact the debt is about 130% of its value - couldn't she just force it to be repossesed by defaulting on the payments (she can have access to secure rented accomodation). Also, this guy is bankrupt but his year ends in April and her solicitor says that then he gets his half of the house back - how can that be? And will she have the debt for ever or does she also need to go bankrupt?

He's stitched her up (deliberately, it's nasty). Hoe can we go about getting her out of the mess???

thanks

Kate

skint_geordie2007

Sorry, dont know much about this.
But you said "this guy is bankrupt but his year ends in April and her solicitor says that then he gets his half of the house back ". If you mean that they have put an order on his half of the equity, I believe if children are involved they cant do anything in the first 12 months, but have up to 3 years to realise it. I wouldnt say he gets his share back after 12 months.
Maybe someone else can come along and verify.

Sooty0404

Just a thought...

If the loan was originated in Ireland could it possibly be for 90,000 euros which would make the 'loan to value' a bit more realistic.
The husbands financial interest in the house would have passed to the OR and she can buy this back for as little as £1 + fees if it is in negative equity.
Although the husband would still own half the title he would then have no monetary claim if the house did eventually sell for a profit.
If she intends to stay there (and can afford to) she should get her husband taken off the deeds so that the house is hers. She needs legal advice on this point.
Presumably the extension has increased the value of the house and as the loan has also paid for the car - for 90k it must be some extension or one hell of a car - she could sell the vehicle to ease the financial burden.
Alternatively she could, as you say, allow reposession but will still be jointly liable for any shortfall. A secured debt will not easily go away.
Even though bankrupt, her husband is still jointly responsible for any loan secured on the house and this will be one for her solicitor and the Divorce Court to sort out.
This is a bit too specialist for me to offer anything other than a personal opinion but I wish her and the kids the best of luck.

Bossyboots

Does the husband's solicitor not understand that half of nothing = nothing?

It is for agreement or order in divorce proceedings to decide what percentage of the property each spouse gets. The husband is not necessarily entitled to half.

There is no automatic entitlement to remain in a property just because children are involved. However, the courts will expect the parents to try to work something out that makes it all far less stressful for the children and if at all possible keep them in their home. If it is feasible to sell a property for both parents to buy another one, then that is what would be expected. In this case it seems the wife has somewhere to go with the children so keeping the property should not be considered the only option.

However this case is complicated by the bankruptcy anyway as, as Sooty has said, the husband's share would have passed to the OR. I don't know what would have happened to the mortgage/loan here though. I am sure someone will know whether his share of those could have been included in his bankruptcy.

This house is surely just a millstone around her neck and even if it is sold, there will still be a lot of debt to pay. Some proper legal advice from a solicitor dealing with matrimonial law who also has knowledge of or works in a firm that deals with bankruptcy is essential.

She may be entitled to legal aid if she is on benefits or a low income.

pariskate

Thanks for your answers. She does get legal aid and benefits, although her solicitor doesn't seem to be very active in sorting things out. The husband doesn't even seem to have a solicitor. Unfotunately the loan is in pounds sterling so, yes it is that big. She would willingly sell the house but the husband won't give his permission (he's joint owner of course).

She may well sell the car but is also in a very negative frame of mind that the debts are so huge relative to her income (she takes home about 1k per month, including benefits and tax credits), that there seems little point in trying anything!

When you are declared bankrupt I know that the OR controls all your assets and your money but when you are discharged are all your debts written off? Does this mean that at the end of three years he will be debt free (through bankruptcy) and she will be stuck with the debts (as they are jointly and severally liable)? That seems mighty unfair.

I've told her to go to the CAB and ring the national debtline but I'm too far away to drag her along to these places or get sense out of the solicitor.

Thanks for any advice or ideas - I'm grateful,

Kate

tight_jock

pariskate wrote:

Thanks for your answers. She does get legal aid and benefits, although her solicitor doesn't seem to be very active in sorting things out. The husband doesn't even seem to have a solicitor. Unfotunately the loan is in pounds sterling so, yes it is that big. She would willingly sell the house but the husband won't give his permission (he's joint owner of course).

She may well sell the car but is also in a very negative frame of mind that the debts are so huge relative to her income (she takes home about 1k per month, including benefits and tax credits), that there seems little point in trying anything!

When you are declared bankrupt I know that the OR controls all your assets and your money but when you are discharged are all your debts written off? Does this mean that at the end of three years he will be debt free (through bankruptcy) and she will be stuck with the debts (as they are jointly and severally liable)? That seems mighty unfair.

I've told her to go to the CAB and ring the national debtline but I'm too far away to drag her along to these places or get sense out of the solicitor.

Thanks for any advice or ideas - I'm grateful,

Kate

As I see it and ,these are only my thoughts.

The husband is no longer the joint owner as his interes will have passed to the OR when he declared BR. Therefore the OR has to give any permission needed not the husband.

At the end of the initial period of BR, the BR may be given a payment order for 3 years or if found to have been trying to deceive the OR ,or involed in a fraud etc.etc., can be given a BR restriction order for up to 15 years . This, technically extends theperiod of BR restrictions for the term given. So , no , he wont get away scot free with this.

The friend needs to get some advice, - I would recommend the CAB