What can you do with a joint loan when partners split?

WorriedParent

Hi all, this is my first post and I am seriously worried about my daughter due to her former partner defaulting on their share of a joint loan.

They opened a joint loan whilst living together; they both worked in the same bank and so got attractive rates. However, they split up almost 1.5 years ago and her ex-partner has since married, but now the ex has stopped making their share of the payments towards the loan and refuses to enter into communication about it.

My daughter now works at a different bank and her career has been going well, but she is now worried sick about her future prospects as she simply can't afford to pay the full loan, nor should she in my view.

The lender refuses to consider splitting the loan 50/50 so that my daughter can keep up her end of the arrangement and I'm hoping someone out there will tell me what can be done?

My daughter is extremely conscientious and is desperate to continue to pay her share, but because the ex is determined to default, the lender is treating my daughter the same way as the ex.

So far, only one half-payment (the ex's half) has been missed, so it is still early. My daughter is making regular calls to the lender in an attempt to reach an agreement, but they are trying to force her to to pay the full monthly amount, which she simply can't manage.

Please help and tell me if there is something that can be done to force the Bank who made the loan to split it to allow my daughter to keep her credit record and therefore her career and her health on track.

She originally only owned one third of the monies borrowed as the loan was to pay off her ex's debts and now she is feeling rather foolish, but more than willing to take on 50% of the outstanding amount (which she can manage).

I am genuinely concerned for her health, so please help.

WP

matttye

Unfortunately she's liable to pay the full debt, just as he is.

http://www.payplan.com/debt-library/joint-and-several-liability.php

If they're getting payments from your daughter, they'll probably decide it makes more sense to chase her for more money than to chase the guy paying nothing.

HappyMJ

She has to pay it to keep her credit record clean. Then has to take court action against him for the money. So...send him a Letter Before Action by recorded delivery...and if no response then open a court claim on https://www.moneyclaim.gov.uk/web/mcol/welcome It'll cost money and take quite a while but if he doesn't pay you have some enforcement options such as an attachment of his earnings and his credit will be destroyed. If he genuinely has no money then taking court action may not be worth it.

Apples2

WorriedParent wrote: »

but she is now worried sick about her future prospects as she simply can't afford to pay the full loan, nor should she in my view.

Sadly it doesn't work like that.

Joint and Several means they are both liable for the entire loan so the bank have options (they probably got a better rate because of this).

There are no "halfs" to this loan, your Daughter is responsible and liable to make all payments, in full until the debt is cleared so your comment that only a half a payment is missed is not correct.

The same goes for her ex but there is no point in chasing him if he isn't paying, they have an easy target in your Daughter.

If any payments are missed (FULL payments that is), both of their Credit Files will be getting destroyed.

WorriedParent

Thanks for the responses so far, but I find it hard to understand why a business would sacrifice losing all monies due instead of being guaranteed half and then chasing the defaulter for the remainder?

If she was able to pay the whole amount, then yes, it keeps here record clear, but the ex's record remains unstained as well and that sticks in my throat a bit.

Why no legal recourse to the bank? My daughter's done and is doing nothing wrong, with the best possible intentions, it just seems crazy...

matttye

WorriedParent wrote: »

Thanks for the responses so far, but I find it hard to understand why a business would sacrifice losing all monies due instead of being guaranteed half and then chasing the defaulter for the remainder?

If she was able to pay the whole amount, then yes, it keeps here record clear, but the ex's record remains unstained as well and that sticks in my throat a bit.

Why no legal recourse to the bank? My daughter's done and is doing nothing wrong, with the best possible intentions, it just seems crazy...

From a business point of view it makes perfect sense to expect your daughter to pay the lot. Let me explain why...

The ex is paying nothing. He's showing a blatant disregard for wanting to pay the money back and probably doesn't care what happens to his credit file.

Your daughter is making an effort to pay her half of the debt. The lender thinks they have a better chance of the debt being paid by keeping the joint liability than by splitting it and giving half to the ex - who is likely to pay nothing.

Morally your daughter wouldn't be doing anything wrong by only paying her half, but the terms and conditions she signed up for when she took out the loan would have made it clear she was severally and jointly liable for the entire debt, so by her not ensuring that the entire amount is being paid each month, she is in breach of the terms that she should be aware of. The ex is too, but he doesn't seem to care.

If the bank gave half of the debt to someone who's not paying anything towards it, they might as well write that half of the debt off. I'm sure you can see why it makes no sense for them to do that.

molerat

There is no recourse to the bank because when she signed on the dotted line she, as well as her ex, agreed to be liable for the whole amount. The bank will chase the easiest target. To prevent her credit file from being trashed she has to keep up the payments. Is a bad debt likely to affect her job, if so maybe re-financing is the way to make the payments easier. Taking on someone elses debt is never a wise move as I am sure she now realises.

sharp82

No one ever thinks about the poor loans when they split

John1993_2

WorriedParent wrote: »

Thanks for the responses so far, but I find it hard to understand why a business would sacrifice losing all monies due instead of being guaranteed half and then chasing the defaulter for the remainder?

If she was able to pay the whole amount, then yes, it keeps here record clear, but the ex's record remains unstained as well and that sticks in my throat a bit.

Why no legal recourse to the bank? My daughter's done and is doing nothing wrong, with the best possible intentions, it just seems crazy...

She signed an agreement that said that she was responsible for the entire amount.

Are you claiming that she is not mentally competent, or that she was coerced?

The advice will depend on which reason she was not responsible for her actions.

Apples2

WorriedParent wrote: »

If she was able to pay the whole amount, then yes, it keeps here record clear, but the ex's record remains unstained as well and that sticks in my throat a bit....

That is the annoying thing about it. The other party can swan off leaving someone else to sort the mess of and end up with a clean credit file.

You aren't alone though, we get many posts like this. You won't find many posts on here recommending joint loans because of this. Unfortunately people never think they will split up.

Not as bad as being a guarantor though, at least your daughter has benefited from their joint loan

WorriedParent

Thanks again for all the advice. It appears the only way to see any fairness in this is to advise her to default as well. Yes it will ruin her banking career prospects and yes it will ruin her credit file, but for her to pay the entire loan is not a possibility and if the bank insist on that or even expect is, then they end up with nothing and instead of writing off or chasing up 50% from the ex, they have to chase 100%. In the modern age of communication I find this difficult to understand. But I would not encourage her to pay to maintain the ex's credit status. I know you may think it's cutting one's nose off to spite their face, but in my view it's called fairness.

Several times I have noticed the same point being used in your responses, i.e. that the bank will focus on getting 100% from my daughter, simply because she has the scruples to do what is right. But if she paid the full amount, the ex doesn't have to worry about anything and when you are being pushed... at some stage it's important to push back.

My daughter actually worked in recoveries for the lending bank and she told me exactly what you have all said here, but as a businessman, I find it difficult to accept, i.e. that there is no alternative and ex partner can intentionally ruin someone's life even though they are settled into married life, and caring not a jot.

I think she needs to tell the bank she has no intention of paying either and if necessary, find a new career, she's young and will recover in time and without being bullied by the ex or the bank.

Thank you all for your input, much appreciated.

WP