Joint loan, can I split the debt??

Bruntonio

Hi everyone,


I am separated from my wife and about to start off the divorce proceedings, this should be a straightforward divorce but we have a jointly named loan with £24k left on it.


It's an unsecured loan from Northern Rock, taken out 10 years ago as part of their Together Mortgage to give us a 125% mortgage (95% LTV mortgage and a 30% unsecured loan).
The loan has a 20yr term left on it and costs £286.00 per month.


My problem is that my ex is not paying anything off the loan, so I am forced to pay the full monthly amount so I don't get a defaulted payment against my credit file.


I spoke to a solictior yesterday who said she thinks the only option is to get a Consent Order drawn up through a court, so there's an agreement of who pays what per month but that doesn't remove her from me financially.

Does anyone know if it is possible to get the loan split and separated off into individual names or failing that, what is the best way to get myself finanacially unlinked from my ex?




Also, if we are tied into the loan together, does this create a credit file link where if my ex applies for a mortgage or runs up other debts, can that affect my credit rating in any way?




Thank you in advance
Paul

[Deleted User]

You can make whatever arrangements you want with your ex, but you'll both remains jointly and severally liable in terms of the loan agreement.

Carrot007

Bruntonio wrote: »

Does anyone know if it is possible to get the loan split and separated off into individual names or failing that, what is the best way to get myself finanacially unlinked from my ex?

Also, if we are tied into the loan together, does this create a credit file link where if my ex applies for a mortgage or runs up other debts, can that affect my credit rating in any way?

If you both take a loan for half the balance and pay the others off you can split. There is no way however without agreement or court if that's what you were after.


And yes having a joint product links you. And whilst I'm sure someon will be along to say credit "ratings" are nonsence the link with bad info certainly will make it harder to get credit. It just might not do anything to the imaginary number.

sourcrates

Bruntonio wrote: »

Does anyone know if it is possible to get the loan split and separated off into individual names or failing that, what is the best way to get myself finanacially unlinked from my ex?

Also, if we are tied into the loan together, does this create a credit file link where if my ex applies for a mortgage or runs up other debts, can that affect my credit rating in any way?

Hi,

Unfortunatly you cannot change the terms of a loan you have both already agreed too, if she could pay off her half of the outstanding balance using further individual finance, then the financial link between you would be severed, obviously that would depend on her cooperation, and her your abilitiy to re-finance, either of which may or may not be possible.

Candyapple

The simplest way to get rid of any financial connection with your ex is to sell the property, pay off the loan and then split the proceeds.

Bruntonio wrote: »

My problem is that my ex is not paying anything off the loan. I spoke to a solictior yesterday who said she thinks the only option is to get a Consent Order drawn up through a court, so there's an agreement of who pays what per month but that doesn't remove her from me financially.

What's the reason your ex is not paying her half? Also, for how long has she not been paying for?

Your solicitor is correct. It won't remove the financial link and with £24k remaining, that's a long time to remain tied to someone in the hopes they continue making payments for at least the next 10 years.

Bruntonio wrote: »

Does anyone know if it is possible to get the loan split and separated off into individual names or failing that, what is the best way to get myself finanacially unlinked from my ex?

Nope, you took out a joint loan, only way to clear it is if one or both of you cleared the entire balance. The lender is not interested if only one of you is paying given that you are jointly and severally liable.

Bruntonio wrote: »

Also, if we are tied into the loan together, does this create a credit file link where if my ex applies for a mortgage or runs up other debts, can that affect my credit rating in any way?

Yes. So if your ex goes bankrupt / gets defaults / CCJs / enters into a DMP, it means anytime that you apply for any credit, you are at the mercy of the lender as to whether they will search her credit history or not and make a decision whether to allow you to have a new bank account / card / loan / mortgage etc. Since every lender is different and none of them publish whether they search financial associates files, no one here can tell you for definite. But the odds are that most lenders do and it does affect your credit history.

Bruntonio

Thank you all for your replies.


We've already sold the family home and moved on back in May, so just have this unsecured loan tied round us
I've since bought my own house and she is in rented.



So, it looks like I'm a bit stuck for now, I'll have to try to convince my ex to take out a loan for her half of the unsecured loan, at least it will reduce the amount of debt she has when applying for a mortgage for her affordability.




Cheers
Paul

TripleH

Do you have children together or any other financial connections?
If not too late might be worth using the loan as a bargaining tool against something else, ie you take on this loan in exchange for domething else just so you can break the link.

Worst case is she screws you over with the loan in the near future so you might have to havd a bitter pill to swallow now so you can move on with your life in the future.

D_M_E

There is no her half and your half - even if she were to somehow manage to pay off half the loan leaving you with the other half to pay, you would both be tied together until the loan is finally paid off.

Also, should one of you go bankrupt, then the other one can and would be chased for the outstanding balance.

I don't think an agreement that one of you pays off half leaving the other to continue payments would have any effect on the lender either, unless you got it in writing from the lender that they would and do agree to such an arrangement - without their written agreement, nothing would change.

BobQ

As DME says you are both responsible for paying off all the loan. The lender granted a loan on the basis you were jointly responsible.

You mention a simple divorce but divorces are rarely simple. The way you resolve this is through a financial agreement on the division of assets and debts you have jointly accumulated. This includes sharing of pensions.

jonesMUFCforever

For the OP to 'split' the loan the original needs to be repaid first.
So OP gets a loan for £12k and she gets a loan for £12k - both of you then send the monies to your solicitor who will arrange for it to be paid off.

Any other variation and it will not work.
Make sure your solicitor is aware of this loan when it comes to a divorce settlement.

enthusiasticsaver

As long as you have a joint loan you are linked to your ex financially.

The lender does not care who pays it, you, your ex or half each. Therefore you need to come to an arrangement with your ex or pay it off yourself. You can get a consent order through the court as your solicitor says to come to an arrangement as to who pays what but not sure how expensive that is to get hold of and it does not remove the link. I think it would be better to come to an amicable arrangement if possible. After all it is in her interests too to get it sorted so she can move on too.