New debt after bankruptcy

futurefree

Hi all, Im nearly at the 6 year post bankruptcy, an ongoing issue is ex lives in a property with my name on the mortgage it has arrears, he wont remove it and the lender NRAM who have a repossession order wont enforce it as he pays them the minimum secured mortgage payment. The only route is me taking it to court and I've been told by a solicitor theres no guarantee they will give an order for sale but its possible. Now ex is getting unpaid property maintenance fees added to the mortgage, an extra 8k of new debt has been added.

I thought the following re bankruptcy applied to me:

any debt or liability to which I may become subject after the commencement of the bankruptcy (including after my discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy, would mean I was not liable for any new debt, BUT the trustee in bankruptcy has said I am liable as its new debt. Have they got that wrong? Thanks

mwarby

Did the mortgage in its current form exist at time of bankruptcy ? did you later extend this or switch deals (arguably creating a new account, so new debt) ?

silvercar

The lender will generally make payments to the freeholder for ground rent and maintenance/ service charges in order to prevent the freeholder terminating the lease. If the freeholder terminated the lease the mortgage lender would be left with no security at all. It is generally a clause within the lease that payments be made or the leaseholder risks the freeholder terminating.

This wouldn't alter the mortgage, if you had not signed any new terms. Effectively it is arrears, but arrears of the service charge rather than arrears of mortgage payments.

As you signed for the property before the bankruptcy, then you signed up to the terms of the lease before bankruptcy. I wonder if your ex signed something to allow payment to be made from the mortgage and whether this would effectively create a new debt.

National_Debtline

Hi there,


I have replied to a more recent post in another thread but I as there are a few more details here, I wanted to add a bit more information too.


As others have said, if the mortgage began before you went bankrupt then any shortfall to the mortgage will be included in your bankruptcy as a 'contingent debt' once the house is sold. Secured debts cannot be included in bankruptcy, just make sure that you do not sign a deed of acknowledgement about the shortfall.

As far as the service charge arrears are concerned, it will depend on when they built up and how/if they have been added to the mortgage. Your liability may be written off as part of the bankruptcy, or you may be held joint and severally liable. Generally speaking, debts that build up after the date of the bankruptcy order, would not be included in the bankruptcy and you would be liable. But there is some grey area here.


Laura
@natdebtline

futurefree

Hi all
The mortgage existed in its current form at the time of bankruptcy although then it was northern rock, who changed to nram, who have now changed to Landmark mortgages.
I have not extended it/switched rates or deals and I have never signed any paperwork for the lender other than my signature on letters I've sent them complaining about the issue and asking them to stop adding new secured loans onto the old debt.

Your right silvercar thats exactly what they are doing and I wonder if he has signed something (we dont have contact, but I have written letters to him asking for information and his agreement to sever this tie - he does not reply)

Hi Laura, the maintenance fee debts built up after my discharge from bankruptcy. So I guess that means its new debt and I'm liable.

silvercar

Hi Laura, the maintenance fee debts built up after my discharge from bankruptcy. So I guess that means its new debt and I'm liable.

Not necessarily eg a build up of arrears post bankruptcy date wouldn't be considered a new debt.

National_Debtline

The issue here is that service charge arrears are not an excluded debt in bankruptcy. So any arrears that built up before you went bankrupt would've been included in the bankruptcy as normal, such as a credit card, loan, gas, electric etc. and would've been written off.


However, after the bankruptcy, any new arrears would be a new debt and that would normally mean you are liable. In the same way that if you put gas arrears into your bankruptcy, and then fell behind years later, that would be a new debt that you must pay. You couldn't argue that you went bankrupt years ago and included gas arrears so the new arrears don't count.


The mortgage is only a provable debt in bankruptcy once the security is gone (once the house sells) and then the shortfall is included after the fact. If the service charge arrears have been added to the mortgage after your bankruptcy then they could be classed as forming part of the mortgage and could be written off in the shortfall. I would suggest you ask your mortgage lender for a breakdown of the mortgage and check the terms and conditions of the service charge agreement. Good luck,


Laura
@natdebtlin

silvercar

National_Debtline wrote: »

The issue here is that service charge arrears are not an excluded debt in bankruptcy. So any arrears that built up before you went bankrupt would've been included in the bankruptcy as normal, such as a credit card, loan, gas, electric etc. and would've been written off.


However, after the bankruptcy, any new arrears would be a new debt and that would normally mean you are liable. In the same way that if you put gas arrears into your bankruptcy, and then fell behind years later, that would be a new debt that you must pay. You couldn't argue that you went bankrupt years ago and included gas arrears so the new arrears don't count.


The mortgage is only a provable debt in bankruptcy once the security is gone (once the house sells) and then the shortfall is included after the fact. If the service charge arrears have been added to the mortgage after your bankruptcy then they could be classed as forming part of the mortgage and could be written off in the shortfall. I would suggest you ask your mortgage lender for a breakdown of the mortgage and check the terms and conditions of the service charge agreement. Good luck,


Laura
@natdebtlin

If this is true, then the answer may be that OP should pay the service charge, or at least make sure that it is paid by the ex.

futurefree

I have phoned the Insolvency Service and given them details of my situation. They have told me that I am not liable for the service charge debts once the security (flat) is gone. They explained any agreement I was party to pre bankruptcy falls within the bankruptcy even if debt occurs years later - the debt still stems from the original agreement.

They also said if I did not include the service charge in my bankruptcy application not to worry as it is still covered (any agreement I was party to pre bankruptcy) is covered.