Bankruptcy Advice

cogsy1976 · 2 July 2019 at 10:42AM

HI All

I have recently split with my wife as I found out at Xmas that she had been a secret gambler and owed £118k that I knew nothing about, all this was done on credit cards, loans etc..

She has since gone bankrupt to get rid of the debt but we do own a house with a mortgage and secured loan on it, there is about £66k equity in the property between us.

I know I can make an offer to the Bankruptcy people for her share but my question is if I do that then surely all I am doing is saving her share of the property and she would still be on the mortgage and secured loan unless I was able to afford to take the mortgage and secured loan on myself? Im gutted tbh we have a 9 year old son and in my view she has jeapordised his home just to get debt free.

ANy advice greatly appreciated.

Thank you

TheGardener · 2 July 2019 at 12:46PM

Have you talked to any of the debt charities - Stepchange, National Debtline, CAB etc? I would suggest you do and then come back to the board to ask further questions. Its clear you are still very angry about your wife's actions which is understandable. I guess you need to decide how you are going to deal with this based on the impact on your son. If your ex still has gambling problems, then 'saving' her share of the house might only be putting off the inevitable loss of the property anyway?

If you don't buy 'her share' then the OR will force the sale of the property (the OR has up to 3 years to do that) and give you 'your share' from the proceeds.
Your ex will have to look for rented accommodation for her and your son. Perhaps you could use some of 'your share' to secure a decent rented home at some point to ensure your son gets settled in a new home?
To be honest - unless she is a very high earner - 118K of debt would probably be more than she could ever pay back so BR was probably the only realistic option.

Minkym00 · 2 July 2019 at 8:39PM

People often don’t get advice before they declare bankruptcy. They think that they pay £680 and the debt magically disappears. Unfortunately this is only the case if you have no assets. If a bankrupt has assets then they will be sold for the benefit of creditors.

The best way of securing the property for your son is to make an offer to the OR on her £33k beneficial interest. Remortgaging will be impossible now one of the joint mortgagees is bankrupt. The OR will have put a restriction on the property to prevent you selling it from under them but might agree for you to put in on the market - unless you can you raise the funds any other way? The alternative is that the OR will force a sale and, although they have three years in theory, it’s highly unlikely they will wait that long in reality if there is a reasonable amount of beneficial equity in it.

Your ex will end up with a bankruptcy restrictions order too on that level of gambling. This means that the restrictions she is under as a bankrupt will be extended for a number of years. She’s looking at 7 or 8 years.

Sorry you’re going through this. Gambling really does wreck lives.

debt_doctor · 2 July 2019 at 10:58PM

Hi,

The Gardener speaks a lot of sense here. if the mortgage cannot be afforded going forward then it would be bonkers for you to pay money to the OR.
The mortgage lender doesn't care about any arrangement made about the equity - if they don't get paid then they can repossess the property.

Will the mortgage get paid going forward? If not then think very carefully about buying an interest that could well end up being nothing in repossession.

DD

Mouse007 · 7 July 2019 at 10:42PM

If you can afford the mortgage solo and to pay the OR £33k (give or take), then buying your wife’s beneficial interest back from the OR would NOT be saving her share (for her) but saving it for yourself. You would own 100% of the beneficial interest.

While her name might remain on the mortgage and title deeds she would not be entitled to any proceeds of sale. You bought those rights by paying the OR £33k.

Jack_Merell · 9 July 2019 at 12:24PM

Something similar happened to a friend of mime here in Spain. In this case, the man had big ludopathy problems. At some point he had a debt of 60k€. His wife helped him to paid that back but some years after he did the same and was in debt again. Then, they divorced and the wife kept the children.
I don't know about the laws in UK, but I think you can keep the custody of your kid (In Spain would be more difficult - the gender laws here are very strict against men...). I wish you good luck!

TheGardener · 9 July 2019 at 1:01PM

Mouse007 wrote: »

If you can afford the mortgage solo and to pay the OR £33k (give or take), then buying your wife’s beneficial interest back from the OR would NOT be saving her share (for her) but saving it for yourself. You would own 100% of the beneficial interest.

While her name might remain on the mortgage and title deeds she would not be entitled to any proceeds of sale. You bought those rights by paying the OR £33k.

...but in the eyes of the divorce courts - she would still have a share. That's what the debt doctors post was pointing out and what I alluded to.
If the ex is still on the mortgage, the house is still at risk even if the OP technically owns it. So what will the OP do? become a landlord to his ex and they don't pay the rent due to gambling? evict his own son? sell it and 'give' the proceeds back to the ex so they can buy another home for the son?
DD and I both suggested that the OP needs to consider the long term options - not just 'rescue' the ex..

Mouse007 · 15 July 2019 at 7:27PM

TheGardener wrote: »

...but in the eyes of the divorce courts - she would still have a share. That's what the debt doctors post was pointing out and what I alluded to.
If the ex is still on the mortgage, the house is still at risk even if the OP technically owns it. So what will the OP do? become a landlord to his ex and they don't pay the rent due to gambling? evict his own son? sell it and 'give' the proceeds back to the ex so they can buy another home for the son?
DD and I both suggested that the OP needs to consider the long term options - not just 'rescue' the ex..

Sorry I’m going to disagree

the OP has a net wealth (we presume). That may be cash and equity for example. If he uses the cash to buy some equity (the beneficial interest) he would have less cash more equity. His net wealth however is still the same, no change. One asset has been swapped for another, on day one nothing has been gained or lost.

It would be exactly the same if the OP borrowed to purchase the BI. Before he had some equity and after he has twice as much equity less the new borrowings. His overall wealth remains the same.

Your point about the eyes of the divorce court is irrelevant, they look at income and wealth. The OP’s wealth is unchanged, the ex has nothing. If the divorce court were going to make any orders they would do so by considering the financial positions and needs of the parties. What difference does no change to the overall wealth position make to that?

Re reading debt doctors post I can not see he said anything of the kind. You and he were focussing on the affordability of paying the mortgage, which was a great and valid point to raise. I was answering the question, “would the ex benefit” the answer is no.

Perhaps I should amend that to “No more than she would anyway, should you end up divorcing”.

But that wasn’t the question.

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