Husband thinking of going bankrupt

iamanewbie

My husband is thinking of going bankrupt.

All his debts about 30-35k are being handled by a company called spectrum. He has been using them for 7 years now. At the beginning they gave the line that all debts would be written off in 5 years, this has never happened and frankly he needs to sort himself out.
I don't know if bankruptcy is the way forward although it seems a very good option at the moment.
The trouble is we have a house (it's in my name) as I was able to put down a considerable lump sum to buy the place in the beginning, but he pays the mortgage/most bills. Would our house come into jeopardy if he goes bankrupt and would any of my assets savings be involved? We have 2 children and am concerned their things would be taken!
We have not financial connection.
Thank you in advance for your help, we just don't know where to turn. Jacky

di17

Hi i have just been through someat like this my partner has just gone bankrupt and he lives with me and has done for 3 years. The house is in my name and we have no joint debts. Make sure u dont even have a joint bank account. The OR was not interested in the house as it was in my name only and i pay the mortgage. You might have some trouble if he pays mortgage but all my partner said in the interview was that gf pays mortgage and that was it.:) They have never asked about anything of mine in my house or my savings as all in my own name.

mattannar

iamanewbie wrote: »

My husband is thinking of going bankrupt.

All his debts about 30-35k are being handled by a company called spectrum. He has been using them for 7 years now. At the beginning they gave the line that all debts would be written off in 5 years, this has never happened and frankly he needs to sort himself out.
I don't know if bankruptcy is the way forward although it seems a very good option at the moment.
The trouble is we have a house (it's in my name) as I was able to put down a considerable lump sum to buy the place in the beginning, but he pays the mortgage/most bills. Would our house come into jeopardy if he goes bankrupt and would any of my assets savings be involved? We have 2 children and am concerned their things would be taken!
We have not financial connection.
Thank you in advance for your help, we just don't know where to turn. Jacky

The bank was happy for him to take a mortgage on a proprty he didn't own. What security could he put up if he could not use the house. All sounds starnge sorry.

meer53

mattannar wrote: »

The bank was happy for him to take a mortgage on a proprty he didn't own. What security could he put up if he could not use the house. All sounds starnge sorry.

The OP doesn't say whose name the mortgage is in, i would assume from her post that it's in her name but i might be wrong.

alastairq

There is a misunderstanding here, I think?

There is a huge difference between 'owning' a property...and having a 'beneficial interest' in the property.

Beneficial interest in a property can be acquired over time...even if not the 'owner' of that property.

And an 'owner' could actually have no 'beneficial interest' in a property.

It is the beneficial interest a BR person holds in a property, that the OR is concerned with.

However, whether the OR takes any action to recover that BI will depend upon how much equity is in the property.

Mouse1812

From

Mouse1812 wrote: »

Those entitled to the proceeds of sale are those who hold a beneficial interest in the property, whether they be the legal owner or not. It is possible to be a legal owner without having any beneficial interest. Likewise it is possible to have a beneficial interest without holding legal ownership. Most of us have both legal and beneficial ownership, but that gets broken on bankruptcy.

Beneficial Interest may arise from contributions (payments) made and agreements between parties. The courts will look at the amounts contributed to the purchase of the property and any evidence of common intention between the parties.

Before bankruptcy Mrs Mouse and I jointly purchased a property. She provided the deposit from her own funds. I met the mortgage repayments for some 10 years. So we both made financial contributions. On analysis you could argue one of us paid more than the other, however our “common intent” was clearly 50:50, even if we did not specifically talk about it.

On bankruptcy my BI went to the OR. Mrs Mouse bought that BI back. She then owned all the beneficial interest. However since then I have continued to pay the mortgage, in doing so I will argue (if I need to) that I am accruing a new beneficial interest in our home. Indeed if Mrs Mouse and I continue to be together I’m sure some common intent will give me back a 50% beneficial interest.

Iamanewbie, I hope you check back, there are issues here you need help with.

By paying the mortgage your husband may have acquired a beneficial interest in your home. You need to understand this inside out and be ready to fight over the amount.

Without putting up a fight they could deem his beneficial interest is 50% of the equity. From what you have said “I was able to put down a considerable lump sum to buy the place in the beginning” it occurs to me things may not be equal. It would be tragic for you to loose half of your “considerable lump sum” through ignorance.

To enable me to help further please provide some more details

How much is the house worth? What was the original purchase price?
How much is outstanding on the mortgage?
How much deposit did you put down?
How long have you owned the house?
How long has husband been paying the mortgage?

When you say husband has been paying the mortgage has he been paying it directly or has the payment come from a joint account?

Do you have an income?

iamanewbie

The mortgage and house is in my name. The house was originally bought for £168500. I put in £145k. We signed a declaration of trust when we first brought the property, presumably since being married that goes out the window?
I remortgaged a few years ago so now owe about 53k.
Hubby been paying mortgage directly for years (our personal agreement). Lived here for 8 years and I work part time and hubby works full time.

Mouse1812

A Declaration of Trust is not automatically annulled by marriage. What was the declaration?

On those figures you need to be very careful, I would take the view you bought and paid for the house, all the equity is yours and everyone else can sod off. Of course it needs to be put rather differently.

Unfortunately the OR could take the alternative view if presented with the facts incorrectly.

If the OR ends up believing your husband has a beneficial interest in the equity then they can force the sale of your home to collect it. As I said in my last post you need to understand this inside out and be ready to fight.

Before I comment further please explain the purpose (principle terms) of the Declaration of Trust.

iamanewbie

Hi mouse. Thanks for your help.
I can't remember exactly what it said but something like I would get £145k if house was sold and the rest would be split between us.

Mouse1812

Great, get a copy of it, that document is extremely valuable to you.

How much is the house worth now?

Mouse1812

If the house is now worth (say) £200k, after repaying the mortgage (£53k), there would be £147k left. Under the Declaration of Trust £145k of that would be yours because the OR will not have any right of claim which exceeds that which your husband has.

The £2k left is to be split between you, meaning your husband has a potential beneficial interest of just £1k. After selling costs you could argue he has none.

On the information and figures given I think your house should be safe, just make sure your husband tells the OR that your house is subject to the Declaration of Trust (and why) and on current value he has no beneficial interest in it.

With regard to your original question, none of your other assets will be at risk. Mrs Mouse lost nothing. She was even successful in getting the OR to repay her for the shares they sold, registered in my name, which actually belonged to her. I was holding them under a Constructive Trust.

Likewise nothing belonging to the children will be touched. I was not even asked what the children had. They had no interest whatsoever in the household furniture and equipment after I confirmed there was nothing “of value” and no one visited us to check.