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

matttye

WorriedParent wrote: »

There may be a possible breakthrough here, our company lawyer believes there is precedent where the two borrowers can indeed be separated, especially since the ex has now married.

He is now investigating that case to find what legislation was actually used to force this action, so here's hoping.

Meeting with him on Monday to discuss. :-)

WP

I wish you luck with it but be prepared for bad news. I just cannot see why it would be in the lenders interests to split the loan, nor how/why they should be forced to given that your daughter, a competent adult, agreed to the terms.

Please let us know how it goes!

WorriedParent

Thanks Matttye, you're probably right of course.

I see it from the other side though, i.e. why should the bank be allowed to focus only on the partner who has the right intentions and the absolute desire to pay (my daughter).

My business experience would suggest they should work with her as much as possible, while simultaneously chasing the ex for their share and I don't think there's anything wrong with that.

Flexibility and compromise happen in every industry in the world, except apparently, banking and I don't understand that I'm afraid.

To be clear, my daughter has every intention of standing by her contracted agreement, but she could do with a little understanding from the lender, that's all. I don't think it's much to ask!

matttye

WorriedParent wrote: »

Thanks Matttye, you're probably right of course.

I see it from the other side though, i.e. why should the bank be allowed to focus only on the partner who has the right intentions and the absolute desire to pay (my daughter).

My business experience would suggest they should work with her as much as possible, while simultaneously chasing the ex for their share and I don't think there's anything wrong with that.

Flexibility and compromise happen in every industry in the world, except apparently, banking and I don't understand that I'm afraid.

To be clear, my daughter has every intention of standing by her contracted agreement, but she could do with a little understanding from the lender, that's all. I don't think it's much to ask!

They won't just chase your daughter, but she's the one more likely to pay.

If she only pays half the loan, they will chase both your daughter and the ex for the other half.

The banks only interest is getting back the money they're owed. Whether this comes from both of them or just one or the other is not their concern. They might work with your daughter in renegotiating the terms of the loan by extending it so repayments are lowered, but there's no way they'll let her off half the debt.

John1993_2

WorriedParent wrote: »

Thanks Matttye, you're probably right of course.

I see it from the other side though, i.e. why should the bank be allowed to focus only on the partner who has the right intentions and the absolute desire to pay (my daughter).

Because she willingly signed an agreement with them that said that they can do t his.

You seem to be struggling with this concept, with the fact that your daughter willingly took a loan, and agreed to be responsible for repaying it all. Why do you think that she should not have to honour the agreement?

She's an adult, who works in banking. If she's not competent to make deals and be held to them, then who on earth is?

Voyager2002

The advice from this board is that the bank is not at fault; the terms in the loan agreement about "joint and several liability" are not unfair and no challenge is likely to be successful; the villain of the piece is the ex, not the bank.

While the bank's refusal to 'split' the loan feels unfair, the law supports the bank on this. If you manage to find a way to challenge the bank on this you will be changing what usually happens: good luck, but don't expect the legal process to be quick, easy nor cheap.

The most practical solution for your daughter would involve (i) negotiating reduced and manageable payments from your daughter towards the joint debt, and (ii) your daughter using the courts to force the ex to clear his share (and of course if he fails to do so then his credit record would be ruined). Be aware that if you mount a legal challenge to the bank's ability to enforce 'joint and several liability' then they might be less willing to make a payment arrangement with your daughter than would otherwise be the case.

John1993_2

WorriedParent wrote: »

To be clear, my daughter has every intention of standing by her contracted agreement, but she could do with a little understanding from the lender, that's all. I don't think it's much to ask!

By understanding do you mean, perhaps, that she should be allowed to default, but no record be made of that?

What solution exactly are you looking for here?

You are becoming inconsistent in your posts, by the way. In your original post you say;

she simply can't afford to pay the full loan, nor should she in my view.

And yet now you say that she has every intention of standing by it.

Which is it, she will repay it as agreed, or she can't?

WorriedParent

Thanks John1993, I'm not struggling with the concept in any way, I entirely agree that she ought to be bound by the contract.

What I do not agree with is the fact that because the ex has intentionally ceased their portion of the payment, that my daughter must "automatically" assume responsibility for the full amount and then because the loan gets paid by her, no-one chases the ex for any contribution, because the financial record will show what a good customer they've been. Meanwhile they're driving their nice new car and all the while my daughter foots the bill.

I accept that the financiers on here will insist my daughter must do what's right and pay the loan, that's a given, but there is more than one right to be considered here and I'm not certain I'm the only one struggling with concepts.

WP

matttye

WorriedParent wrote: »

Thanks John1993, I'm not struggling with the concept in any way, I entirely agree that she ought to be bound by the contract.

What I do not agree with is the fact that because the ex has intentionally ceased their portion of the payment, that my daughter must "automatically" assume responsibility for the full amount and then because the loan gets paid by her, no-one chases the ex for any contribution, because the financial record will show what a good customer they've been. Meanwhile they're driving their nice new car and all the while my daughter foots the bill.

I accept that the financiers on here will insist my daughter must do what's right and pay the loan, that's a given, but there is more than one right to be considered here and I'm not certain I'm the only one struggling with concepts.

WP

If the bank doesn't get the full payment each month, the injured party is the bank and it is the bank who will take action.

If your daughter makes the full payment each month, the injured party is your daughter and it is her who must take action (against the ex).

It is not the bank's responsibility to chase the ex for money if your daughter pays the full amount, but if they don't get the full amount, they will chase both parties.

Does this make sense?

sharp82

A better use of the lawyers time may be to write to the ex, explaining that if he doesn't keep up with his side of the agreement then you will have no choice but to initiate court proceedings against him.

Maybe the threat will give him a boot up the a*se

duchy

I find it a bit incredible that your daughter has a good career working at a bank yet needs your advice -surely she has access to free professional advice through work?

As a businessman even though it might feel "wrong" could you not help her with the payments and then assist her in trying to take him to court for his "share".

Surely a loan (I assume unsecured) isn't *that* huge if they could service the repayments whilst running a home together ? Can you not think of helping her with the repayments as an advance on her eventual inheritance if you don't want to view it as just throwing money away. The gift of helping her keep her career secure is a huge one.

Extending the term of the loan just keeps her suffering for his behaviour for longer and less able to move on.