Will Ex Wifes Debts be included in my Bankruptcy?

billyjenningsboots

I have recently divorced and I am preparing for bancruptcy but wondering if the Joint Named debts with my ex will be included in my backrupcty or will they be shared 50/50?

fermi

Truly joint debts should be jointly and severally liable, meaning that either person can be pursued for the full amount in normal circumstances. In bankruptcy, assuming it's not one of the few debts that can't be covered, that means that your liability would be wiped and she could still be chased for 100% of it as before.

Strachan

In case this applies to you- apologies if it doesn't, - For credit card debts,the main card holder is wholly liable for the debt. The additional card holder isn't. e.g. If your wife is a main card holder, she is 100% liable, you as an additional card holder are not liable for anything so won't be part of your bankruptcy. If you are the main card holder, then you are 100% liable and the debt can be included in your bankruptcy and written off, your wife as an additional card holder is not liable.

MEM62

As previously indicated, and personal debt (ie exclusively in your name) will be dealt with in your bankruptcy. Lenders in respect of any debts for which you are jointly and severally liable will chase your ex for 100% of the outstanding amount.

billyjenningsboots

What about debts secured on a jointly owned property - am I right in thinking this too would go 100% against my ex?

luvchocolate

yes that is right

RAS

I thought secure debt was excluded from BR?

fermi

billyjenningsboots wrote: »

What about debts secured on a jointly owned property - am I right in thinking this too would go 100% against my ex?

Your personal liability towards the debt would fall into the BR, yes. As long as you do not sign any paperwork post BR agreeing to be liable again.

So the other signatory would be 100% responsible.

fermi

RAS wrote: »

I thought secure debt was excluded from BR?

Yes, and no.

Unlike a normal loan the lender retains their right to rely on the security of the property, which they can repossess and sell. So that is what is meant when people say it's not covered, as in the lender retains that power and right.

However, your personally liability to pay a mortgage or secured loan, or any eventual shortfall should there be one IS covered by the BR.

So the lender can ask you to pay, they can repossess and sell, and any proceeds pays their legal charge, but the can't personally enforce payments or a possible shortfall against you.

Cobalt77

RAS wrote: »

I thought secure debt was excluded from BR?

Secured debt generally speaking is, because the debt has been secured against an asset and thus in many cases that specific debt is considered "safe" as it will be fully repaid when the asset (house) is sold.

Looking at things from a mortgage perspective, as you know, it is possible for properties to get into negative equity - which means there is insufficient security to repay and clear the debt (e.g. mortgage). In these cases, any shortfall when the property is eventually sold would:
1. Either be treated as unsecured debt and included in your bankruptcy, if you were the ONLY person on the mortgage, or
2. As fermi says, be 100% allocated against your "ex" if it was a JOINT mortgage.
So in this case, the lender will almost certainly go after your "ex" for the full amount once you go BR.

As a quick side-note, it's not uncommon for your "ex" to hear nothing from the lender for years about this.

In the early 1990's many people were in negative equity and handed back their keys, thinking that was the end of it. They would then get on with their lives and improve themselves financially. Many years later, they would receive a letter from their old lender demanding repayment out of the blue.

This is because a lender can chase any capital losses from negative equity (i.e. mortgage shortfalls) for twelve years for capital owed, and six years for the interest part of the shortfall

More info here: https://www.nationaldebtline.org/EW/factsheets/Pages/11%20EW%20Mortgage%20shortfalls/Default.aspx

HTH

billyjenningsboots

Thanks for the responses ... if these secured/joint loans are all passed to my ex then there may be a significant drop in the debt purely assigned to me.

Would this be the same in say an IVA?