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Huge Joint Debts After Separation - What to do? :((20 Posts)
I would like to ask some advice about what happens to joint debts once a couple have separated. I will try and be brief but accurate with the facts so that maybe (hopefully) one of you can relate and advise. Sorry it's a bit long We are not entitled to legal aid and just cannot afford to pay a solicitor unless we absolutely have to so any advice or experience with this greatly appreciated.
My partner and his ex split around 3 years ago. They were cohabiting but not married. They had/still have a joint mortgage and a joint loan. She has refused to pay any payments to either of them since they separated. He works in a profession which means he will lose his job if he is given a CCJ or similar, he simply cannot have unmanageable debt. She doesn't care and knows this about his job so has dumped him with all the debt in the hope (we think) that he will worry and be forced to pay them all off to save his job whilst she walks away from the joint debts.
She moved out of the jointly owned house (her choice I will add) and he agreed to stay there and pay the full mortgage for a few months whilst it was put on the market to be sold. She then refused to agree to sell it, refused to reply to letters he sent her asking to discuss, refused to meet with solicitors present and ignored letters from his solicitors about it. He could not afford to pay it alone and has struggled to do so since. He has now stopped paying it as it simply isn't possible to afford on his salary alone, it was a large mortgage base don both of their full time wages.
He has had the house valued recently and it is worth a lot less (about 30k) than what is left on the mortgage. The only thing she has said in over 2 years is that she will sign the forms to sell only if he agrees to pay all fees and make up the 30k needed to cover the negative equity. Just to add that she has a new rented home and doesn't want to live in the jointly owned property, she has shown no interest in it in all this time. He has looked into getting it rented out but the mortgage wouldn't be covered by the rental income and would require a large sum of money for works and decorating to bring it up to rental standard.
Does anyone have any idea of how he can make her take responsibility for a jointly owned property she has walked away from? Ideally he'd like to apply to court to force the sale and split the negative equity into two loans split equally between them, is this likely? Also he paid the rather large deposit when they purchased it - will this be taken into account?
This loan was taken out when they were together, the loan was for her and he co signed it. She agreed to make all payments and it was paid on time from her acct each month until they separated, he has never paid it. Then when they separated she immediately stopped paying and told him she would no longer pay it. The loan paid for her expensive car and other personal items, all of which she took when they separated. She still has this car and he is sick at the thought that she has dumped the loan on him to force him to pay it whilst she is still driving around in the car.
Again, any advise of how to force someone to take responsibility for this? Can he apply to court to have the financial situation decided by a judge. He just wants what's fair and to both have to take responsibility for joint debts, not to have to take it all on whilst she drives away in her nice car without looking back.
Thank you for reading, I know it's long - I have also posted this in legal...
Have you thought about talking to CAB?
The mortgage is a joint responsibility so the mortgage provider will automatically come after both of them. If no payments are made then the property will be repossessed and sold (and probably for less than its actual worth) and they would then come after them both for the shortfall and the costs of repossessing.
When you say 'joint loan', do you mean he is guarantor for it?
I think he should check his credit file too and see what is on there.
Thanks for replies. Cognito - CAB advised him to see a solicitor as it was complicated. With regards to the property they said they often advise people on whether they can force someone to sell whilst the other is living there or advise people who are living in the jointly owned property but their ex wants to sell it, but didn't know what to advise in this situation.
LadyKooKoo - No they are both jointly responsible for the loan too, he's not just a guarantor, it's a joint loan in both their names.
He has suggested she needs to sell the expensive car that the loan paid for and pay off a large sum of the loan, but of course she refuses, it's easier to leave him to pay it whilst she keeps the bloody car
He's stopped paying the mortgage now. She is threatening to leave her job so she will have no way to pay the loan or the mortgage and he is worried he will be dumped with the debt that they BOTH signed up for. It just seems so unfair that one person can walk away from a relationship and leave the other with all the debt.
If he's stopped paying the mortgage then he will have an adverse credit history & could be made bankrupt.
I can't see he has a choice really though. If he carries on paying the mortgage she will just ignore the property and the huge debts. Paying the mortgage on the property she chose to walk away from means we cannot afford to pay our rent and we will be homeless. She has total control over him financially and she knows it. If we did move back into the property we'd not even have enough space for the kids beds there and she still has keys and will walk in and out as she pleases, I couldn't live like that.
He has stopped paying the mortgage in the hope that we can come to an arrangement with the bank somehow, or apply to court to sell the property and ensure she is made responsible for half of the fees/costs/shortfall.
She won't be made responsible for half the debts & the way to get the bank to be sympathetic is not to stop paying! He needs to go in & explain the situation to the bank. Sounds like ultimately they both may be made bankrupt & if it means losing his job how would you pay the rent then? You have a solution, move in & change the locks or offer to take over the debt & the mortgage in return for her coming off the mortgage. Yes it will be a squeeze but eventually house prices will recover & you will have more options.
How many more years to pay on the loan btw?
BTW, I agree it really is unfair but sometimes you need to think hard about what is best for you not getting the other person to be fair.
Why can't you and him move into the mortgaged property together? That way you're not having to pay rent and a mortgage. Also have you checked your house insurance policy, many of these offer free legal advice.
Unfortunately with joint debts both parties are 100% liable. So the bank can choose to pursue both, or more logically to them, pursue the easier target. If the ex quits her job your partner is pretty much screwed.
Thank you all. There's over 15k on the loan to pay and over 30k approx negative equity on the property. That's in addition to the thousands it will take to bring it up to a decent standard to put it on the market.
We can't move into the mortgaged property "rockchick" it's a tiny 2 bed house, we have 3 children between us, one almost a teenager, it was too small for them and their two very small children, it's far too small for us. Plus it's in a different area so we'd have to move schools etc. Plus she has keys and there's a huge back story, basically she's a bit nuts and her family are vile, I would not feel safe/comfortable living there knowing she has access at any time.
It's not even about being fair, I just cannot believe you can rack up huge debts whilst in a relationship them walk off and dump them on the other person.
I have no idea what he will do, we will have to find the money for a solicitor I guess. We can't afford to live in our house and pay the mortgage. It may be that she quits her job (her family have money to support her) and then I have no idea what we will do as they will just chase him for the whole debt.
Be realistic - she won't pay the debt. Even if she were to be made bankrupt it is likely that she would keep the car as i9f it is over 3 years old it will be depreciating rapidly & if she doesn't own a property she has nothing to lose.
Contact the loan company & mortgage company & arrange affordable payments - they may write some of the loan off if your partner shows what he can afford. I can't see how paying a solicitor will help because even if you do sell the house you still have the problem of negative equity.
Contact then bank first and foremost.
They need to know all these details.
Not paying and burying his head in the sand until she changes is a sure way for him to get a bad credit rating: keeping all loan providers in the loop is the way to go. They will restructure it so that it's not too much every month.
I don't think you're going to get any money out of her, after all the effort you've already put in, it seems unlikely.
Whatever you do get advice! Proper legal advice. Do not risk paying the mortagage on a house she owns - worst case she forces a sale in a few years and gets a lump sum!
If they are both listed on the mortgage as "joint owners" then they are each entitled to 50% of the proceeds of the sale - regardless of how much was paid in by whom for the deposit or ongoing mortgage payments. The only way to change this is by amicable agreement (which clearly isn't going to happen in this case) or in court. Sorry, I know it's expensive, but you really, really need a solicitor. Others are right - not paying the mortgage is a terrible way to go, because your partner is killing his credit, and the sale price on a normal sale is nearly always going to be higher than if the bank repossesses it and sells it.
A recent Guardian article stated:
"Where cohabiting couples jointly own their family home, in English law the property will automatically be divided 50:50 even if one partner contributed more to its purchase unless they made a written legal agreement at the time of purchase saying in what proportions they own it. Again, if one partner wants to challenge this in court, it is likely to be costly and there is no guarantee they will win." www.guardian.co.uk/money/2013/mar/09/cohabitation-agreement-essential-non-married-couples?INTCMP=SRCH
Good luck to you both!
I have no direct experience but you have nothing to lose by writing a brief factual account of the situation, sending it to your debtors and then ringing them to see what they say. I am positive they will have dealt with such a situation before. Please don't stop paying any debts without informing them unless you are absolutely desperate. Also, is the loan with the same bank as your husband's bank account? If so I think you need to investigate setting up a 'safe' bank account - otherwise the bank may be able to take money from his account to pay off the loan (check the small print).
That last point is only relevant if your husband chooses not to pay the loan, sorry, probably not clear from my post.
Am so sorry you are having to deal with this, money worries are so hard.
I am a solicitor. I'm not practising at the minute as at home with my two little ones but hopefully I can still help you.
The first thing I would advise is that you need a decent solicitor to represent your partner. This issue is unlikely to be resolved without legal intervention and by delaying matters your partner is risking his own financial security. I know it is a bit financial burden on top of the mortgage and loan repayments but it will be cheaper in the long run.
Don't go for the cheapest one you can find unless you think that they will be able to offer a good service as most solicitors charge by the hour and you get what you pay for. Someone who may seen cheaper on paper may not be as good or efficient as a more expensive lawyer and actually end up costing you more in the long run. Try to go on recommendation if you can and ask to meet with the person you are considering before instructing them so you can suss them out!
Re the mortgage - the comments you have above are correct. If both names are on the mortgage they are both jointly and severably liable i.e the mortgage company can chose to go after either of them for the whole amount. If the mortgage isn't paid your partner (an his ex) will get blacklisted - this will affect his credit for some time until he can get it removed. If the repayments continue to go unpaid, the mortgage company will repossess and sell at a loss. This loss is likely to be greater than if your partner sells as the mortgage company will want to sell very quickly (sometimes at auction). They will then pursue your partner for the difference and their fees. If you consult a solicitor they will probably advise you to pursue an order for sale from the court. This may sound daunting and costly but if your partners ex is being obstructive your solicitor will seek and order from the court for a contribution to your costs from her. The courts hate people delaying matters and being obstructive. If you get an order for costs and she doesn't pay there are ways of enforcing the costs award through the court. Whilst this doesn't remove the debt she has inflicted on your partner it offers some comfort.
Re the loan, again, what others have commented above is correct and the loan company can come after your partner for the repayments. Having worked at a firm which acts for banks and mortgage lenders I have unfortunately experienced how ruthless they can be, and they will pursue the debt.
I agree that it is so unfair, and very difficult for your partner to deal with. You can, however, try to mitigate the amount he will be paying out overall by instructing a solicitor and getting them to force the sale through and pursue her for the legal fees. Also let the loan company and the mortgagor know what is going on as they would appreciate being informed and kept up to date - it shows honesty and transparency on his part. But if he can, try to keep up to date on the repayments as he needs to keep his job!
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