DMP/Divorce options?

Thewannabedebtfree

Hi,
my wife and I are starting to go through a divorce, we own our home and this will soon be going on the market, where we should receive around £40k each. 

I have recently (2 months ago) stopped paying my unsecured debts (£28k) to eventually go onto a DMP. 

Once this house sells, I would like to buy again but I’m concerned I won’t be able to due to the credit score situation with fresh defaults! 

I have two options. 1) to get back up to date with 2 months missed payments (to avoid defaults) ie maintain ok credit score & pay the debts off once this house sells
2) continue with the DMP option and hope for the best going forward (in terms of buying elsewhere) I’d probably  end up using the sale money to pay the debts off!

any advice at all please?

ian1246

Seek legal advice. A financial consent order factors in debts of both parties. "Your" debts are infact legally both of your debts & any split needs to factor them in.

I'd say morally what the debts are for should also be factored in. I.e. if it's benefitted both of you she absolutely should shoulder 50% of the debt. If it's personal due to gambling, drugs or whatever then absolutely not.

Brie

Are the debts in fact yours?  Or are they debts on cards that your other half has where you also have a card?  If the card is in your other half's name then it is legally their debt.  

But yes - as Ian states....if you split all your savings, pensions, ISA, etc plus the major assets like the house then that's what will determine what is yours and what is hers.  Possibly one or the other of you will get more than 50% of the proceeds from the house sale.

RAS

Do also check your credit records. You may already have Arrangement to Pay or other markers. These may affect your credit record for longer than defaults. Speak to a mortgage advisor about the impact now.

fatbelly

If your plan is to move into rented accommodation, as I think you suggested in an earlier thread, then the best strategy is clear:

Get the new accommodation quickly, while your file is clear, then use the lump sum to make settlement deals on the defaulted debts, a year or two down the road. Your file cleans itself again when the defaults hit 6 years

A self-managed dmp doesn't create any fresh mark of its own, and you'd be unlucky to get a ccj. 

If your plan is to try to get a mortgage on a new property, the whole thing becomes more problematic. And there is already enough on your file to mean that you won't be getting the best deals on a mortgage.

Section62

ian1246 said:

Seek legal advice. A financial consent order factors in debts of both parties. "Your" debts are infact legally both of your debts & any split needs to factor them in.

I'd say morally what the debts are for should also be factored in. I.e. if it's benefitted both of you she absolutely should shoulder 50% of the debt. If it's personal due to gambling, drugs or whatever then absolutely not.

AFAIK the bold bit isn't correct.  It would be if the debt was in joint names, but "legally" the debt belongs to the named party.

In determining a suitable financial remedy the court would take into account whether a sole-name debt should go in the pot to be 'shared' when it comes to apportioning assets - but whether the debt would be treated as 50/50 would depend on the whole picture.  Because a sole-name debt is not "legally" both party's debt, the court can look at how that debt was accrued and whether sharing it within the remedy would be fair - this is how, in your example, the court could make sure the other partner (and any children) didn't suffer financial hardship as a result of someone's irresponsible spending on gambling/drugs/whatever.

OP, make sure you inform/consult your wife on any decisions you make about debt solutions - if you do something which has an adverse effect on her ability to obtain credit (especially if she doesn't know about it in advance) any court may look unfavourably on that when approving a financial remedy.  Also be wary of advice to use a DMP/IVA as a 'tactic' in divorce negotiations - again, this is something a court may not be happy about.

RAS

Presumably you have both already closed any joint accounts, not just frozen them?

Thewannabedebtfree

RAS said:

Presumably you have both already closed any joint accounts, not just frozen them?

We still have a joint account, as we are still living in the home so going half’s on bills before it sells 

RAS

Thewannabedebtfree said:

RAS said:

Presumably you have both already closed any joint accounts, not just frozen them?

We still have a joint account, as we are still living in the home so going half’s on bills before it sells 

So anything you do like not paying a consumer credit bill will adversely affect your ex's credit record as well.

Try and get your name off it ASAP and pay your half of the bill independently. Or pay into the account and ask the ex for full transparency. You don't want to give her money and find she's not paid council tax, for example. Talk.