The right path?

Jacko_amz

Hi everyone,

I am messaging on behalf of my partner who is considering bankruptcy here is his situation:

He currently owes around 16k worth of debt to 4 creditors = 2 credit cards, 1 loan and 1 overdraft.

This has happened because of two relationship break downs over the last 3 years.

He is joint on a mortgage on a house that has around 30k equity in with an ex partner. He has tried reasoning with the ex for her to buy him out or sell the house, she is refusing to do either and is basically giving him the two fingers.

from this break up he had nothing to had to set up with new home etc so therefore the debt racked up.

He earns 1200 a month, and £1000 of this is spent on bills- rent, utility bills, CSA, mobile phone. He entered a DMP with stepchange on a token payment plan of £4 a month however he really isn't wanting to spend the next 10years or so repaying this.

He wants to tie up loose ends from his past so that he can move forward and look forward to a new life with me and feels that maybe bankruptcy is the only way to move forward and have it resolved quickly. He understands the whole it will be on file for 6years but feels that if it is taken care of now then he will be better off.

Any advice would be greatly received

debt_doctor

Hi,
The first thing your partner needs to do is take free impartial advice from perhaps CAB or National Debline.

But on a general level and with the info given he could go BR but his equity would be lost in BR and the ex would get her half - but this is pressuming that the lender doesn't take possession first and sell off cheap - in which case you both lose out. However, BR would wipe out his liability for all of his unsecured debt and any shortfall from a mortgaged property.
Of course it would be good to sell the property your selves and take the profit to do as you wish - but I often see this 'none cooperation - nose to spite your face stuff' from ex partners.
I pressume he is renting now - Is anyone living in the mortgaged property?
He clearly doesn't have any spare cash so he cant afford an IVA (and no reason to have one) or a DMP either.
Bankruptcy looks likely to provide the total closure route, but there are still some thoughts to be given to the house and what could be done if there was cooperation.

DD

Jacko_amz

She is currently living in the property and is refusing to budge on anything. He now rents with me.

debt_doctor

Is she paying the mortgage and is it up to date?
DD

Jacko_amz

Yep she's been paying it for 2 1/2 years now and all up to date no missed payments

downhillfast

Considering he is already on a DMP the chances are his accounts have already defaulted and therefore ruined his credit file for the next few years... that combined with the fact that half of the equity of the house wouldn't cover the whole debt (especially if you then consider selling fees etc) then if I were your OH I'd go down the bankruptcy route. Draw a line under it all and look forward to a better future.

Jacko_amz

Thanks downhill fast

debt_doctor

Hi,

I wonder if the ex is aware that if the op went bankrupt, it is likely that her home would be sold (by order of the court) to realise the op's share of the property (with her balance of the equity returned to her)? - Unless she could come up with £15k in cash?
Perhaps it may bring a more meaningful conversation than she has so far engaged in?

DD

Jacko_amz

Hi debtdoctor,

Thank you for repeatedly responding . These conversations have happened many times over the last few months, she is aware he is planning on going bankrupt however is not coming up with any solutions, ideally she would take over the mortgage and buy him out but shes standing firm and will not do this. i think she has been to seek legal advice this week so that's a start, fingers crossed they can persuade her to see sense that rather than lose her house buy him out instead.
Do you have inclines to what a solicitor would advise someone in her position?

debt_doctor

Not that I am a solicitor, but if I were advising her I would ask how important living in that particular house was to her.
If that house was 'the only place she wanted to live' then I would warn her of the serious consequences if her ex was to become BR.

I would suggest that she would need to get a valuation to confirm the house value and obtain the funds to re-mortgage (and get the permission of the ex to do this) then pay her ex the monies owed.

I would inform her that she needs to make sure that he received the full monies he was entitled to so that a Transaction at undervalue claim could be avoided.





In all of this, I presume they were never married, so no family courts settlement to think about?


DD

Jacko_amz

they are not married, however have a 6yr old son in which is living with her, am i right in thinking they can get some restriction in that the house cannot be sold until his 18th?