Joint Mortgage - other party bankrupt!

2520years

Hi everyone. Please can you help me..?

When me and my wife separated 4 years ago I moved into our rental property. It's a buy-to-let property and I've been paying the mortgage since then.

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The situation has just changed:
She's going/gone bankrupt. We're still married and the mortgage is still in joint names.

I'm thinking of ringing the mortgage company on Monday to ask their advice as I don't know how this will affect me, and our daughter who stays here twice a week.

What is likely to happen?
Thanks.

fermi

Main thing is that the Official Reciever/trustee will want to look at and realise for her creditors/fees etc any legal interest she has in the the property.

That doesn't always, or even very rarely, means forcing a sale. In some cases there is no equity in which case they will wait for a few years to see what happens. In other cases you may be allowed to buy any interest she has out.

Mortgage company is normally only bothered whether the mortgage is paid or not.

2520years

Thanks for the reply.

There is little or no equity in the property (thankfully!) I haven't missed any payments either.

I suppose I should still ring the mortgage company to discuss the situation..?

fermi

The most likey result would be her OR/trustee sitting on the situation for 2 years and 3 months to see whether any equity worth claiming develops then due to property price increases.

I would have thought you should give the mortgage company a heads up, but can't see why they should care as long as they get their money.

2520years

"2 years and 3 months" sounds specific. Is that how long bankruptcy proceedings officially last?

fermi

2520years wrote: »

"2 years and 3 months" sounds specific. Is that how long bankruptcy proceedings officially last?

No. If the Official Receiver takes no action, then the beneficial interest "re-vests" in her after 3 years. i.e. it legally returns to her.

So the 2 years 3 months time is the point that under their internal guidance the OR takes another look at the case to see what they might do.

The bankruptcy itself still lasts a year, but dealing with property interests etc that are part of it can extend beyond as they stay the trustees.

arcon5

Even if there was a small amount of equity in the property, considering only a portion would be hers they would more than likely just put a charge on the house for small amounts instead of forcing a sale.
Although if there is equity, built up after the split, I wonder if it could be treated as yours if you're the only one paying the mortgage.

What about considering putting it in your name only?

alastairq

What about considering putting it in your name only?

Does that not mean applying for a new mortgage?

2520years

She wouldn't agree to that tbh.

I feel better now. It sounds like I don't have to worry about losing the house, or having to suddenly fork out huge amounts of money.

I'll ring the lender on Monday.

Thanks.

alastairq

The upside could be...you may have the opportunity to purchase your ex's interest in your home?

I may be wrong here....but I get the feeling that, once you have done that, then if there is a subsequent divorce [don't let me put you off]....your ex would then have no claim [BI ] in the once-joint asset.

2520years

It sounds good and I'd do it if I could, but there's another rental property she was looking after that was recently re-possessed.

That was in joint names too. I can't see me getting the mortgage for my house in my sole name if they did a credit check.