Bankrupcy Advise - Re House / Mortgage

RupertBear6

Hi All

A friend has built up a large amount of debt (tens of thousands) over the past couple of years without telling his partner.  He has since told his partner of the debt and is thinking of going bankrupt but how does that affect their joint mortgage?  Thanks

sourcrates

Err, not in a good way is the answer.

Hard to advise on such scant detail, but if they have joint property then bankruptcy is a last resort, there is a high chance they will lose it.

400ixl

How much of the debt is actually secured against the mortgage vs unsecured?

ToxtethO'Grady

There is a lot more information needed and your friend needs tailored advice.

If someone goes bankrupt the OR has 3 years to decide what to do with a property, they make the decision by 27 months giving 9 months to action it, and a restriction is placed on it. If your friend went BR the restriction would be on their share of the property/equity.

The OR can do all of the actions below depending on the equity and household situation -

 - Sell the beneficial interest in the property to a joint owner or third party for approximate market value.
 - Do nothing and review the situation after two years and three months
 - Apply to the court for an order for sale
 - Offer the case to an insolvency practitioner (IP) to oversee a sale if equity is sufficient to make this worthwhile (usually £10,000+)
 - Place a charging order on the property for the value of your friend's interest in it at that point
 - Transfer your friend's interest in the property back to your friend if it is worth less than £1,000 and no prospect of that changing or wait the 2 years 3 months to do that

It would all depend on how much equity was in the property and your friends share. With joint mortgages they'd say how much they thought was there and the jointly liable person could agree and 'buy' the equity or disagree and get more valuations.Legal advice would be needed in that case.

The OR also takes into account the living arrangements of the debtor and joint mortgage holder and will check if children under 18, caring responsibilities for elderly relatives, any disabilities in the household etc.

fatbelly

It's not so much the mortgage that is an issue so much as the house as an asset.

Why has your friend discounted other debt strategies?