Partner going bankrupt! What happens to my house?

[Lorcee123]

Hi all,
could really do with some advice.

My partner (potentially soon to be ex) is in a joint mortgage with me.

It looks like he’s going to have to go bankrupt after I’ve found out about huge amount to debt he’s in. We’ve started the process of legal advice and debt support but it’s a mine field.

I put in 100% of the house deposit which I am able to prove. He has contributed to a percentage of the mortgage during the 5 years we’ve lived here so is technically entitled to a small percentage of the equality. Our solicitor seems to think there is a chance that if I can show proof of putting in the whole deposit myself, that the house will not be at risk as his percentage is significantly lower than the debt he’s owes.

Has anyone been through this and has been able to prove they put the money in so the house was safe?

Also, I will need to look at taking the full mortgage over myself which may take some time (we have 3 children and I’ve only recently returned to work full time) so my next question is- if he’s made bankrupt, is he able to stay on the mortgage temporarily until I can take over? If so, is this only until the term ends in 18 months or can he stay on it another year or so after until I’m able to take over fully?

we have asked lots of these questions to professionals but can’t seem to get a straight answer

please help I’m so stressed!

x

Sometimes straight answers are difficult on account of multiple interacting variables.

If his name is on the mortgage, he’s contributed towards it and his name is on the deeds, then it’s not just your house.

I would take independent legal advice about what you are personally liable for.

It all depends how you bought the house and what legal agreement was in place at that time. If you never legally ringfenced your deposit amount and you bought as joint tenants then you both own 50% no matter who paid the mortgage.

If he has a share in an asset then is creditors will come after it. You will probably have to accept it needs to be sold and half the equity will be used against his debts. If you have unequal shares then it would be different but it sounds like that was not the case

You are going to need legal help because his official receiver is going to be involved and you need to have some legal support

How is the house owned joint tenants or tenants in common? Did you ring fence the deposit? If joint tenants and not ringfenced then he's entitled to 50% of the equity.

tentants in common, and we’ve recently (6 months ago) had a deed of trust written up to show that I own 99% and he owns 1% (couldn’t do 100%) but apparently this ain’t legal for 5 years so not sure it will help me

we were ‘tenants in common’ from the start, but no % was actually shown in any paperwork, I’m not sure if this is normal practice?
we’ve recently had a deed of trust written up to show I own 99% (couldn’t do 100%) but apparently this isn’t legal until 5 years after signing

Did you post this a few months ago? There was an almost identical post to this.

Is the solicitor that you are using acting for you both jointly? If so then I’d strongly recommend seeing a different solicitor individually. Potentially a family solicitor to establish how you can protect your interests on the basis if you were to separate, as you mention that he may become your ex. A joint solicitor will presumably be looking at protecting your interests as a couple, where as it sounds like you need to protect yourself asap.

if you can’t afford to pay for advice, a good debt advisor (from a free debt charity) should also be able to advise you on this.

read the official receiver guidance on making decisions - check other chapters on jointly held property or beneficial interest in a property:

https://www.gov.uk/guidance/technical-guidance-for-official-receivers/28-freehold-and-leasehold-property

if the above seems too complex start with this:

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy/partners-and-bankruptcy/joint-debts-and-belongings-if-your-partner-is-bankrupt/

in general I would advise against seeking advice on here as many people, although well intended, give wrong advice. Also, small variations in someone’s circumstances could lead to completely different outcomes. You need advice which is tailored to your particular circumstances.

If you own the house 50 / 50, then I'd expect equity to be split 50 / 50. I'd think it's too late to argue now that you own a greater share because you paid more towards the deposit

I don't think the trust will help you either. It'll be challenged as deprivation of assets ie DP deliberately trying to transfer assets into your name to prevent creditors getting money due to them

You may be able to buy your DP's share of the house from his bankruptcy trustee, if your lender will agree to that

I can't advise on his debts but a friend was struggling to pay her mortgage after her partner died and was able to switch it to interest only which whilst not a great solution meant that she could afford to keep the house.

Thank you that’s good to know

If no % was written in at the time then it is presumed to be equal shares, and anything written up recently is invalid here as it looks as though it’s specifically done to get rid of his asset when he very much needs it to pay off debts.

If he's going to go bankrupt then the house will go into the pot for the creditors. Can he discuss with creditors and agree to pay a nominal amount, £1 a month until you get divorced, and then once the financial order is in place he can then go bankrupt.

Ring the mortgage company and see what they say

But also listen to the lawyer

Oh and see if you have free legal cover on your home insurance

https://osmondandosmond.co.uk/resources/residential-property/bankruptcy-and-co-ownership-of-property#:~:text=In%20most%20cases%20property%20is,to%20the%20trustee%20in%20bankruptcy.

You need legal advice asap.

ps not recommending this company, I don't know anything about them but it's got some info that might help you.

Yes there was another poster recently that seemed to be doing all the same things

Divorce, attempting to place assets out of reach of creditors. You say you have 3 children. It seems odd and will seem off to a Trustee in Bankruptcy that you drew up the beneficial trust deeds only 6 months ago.

Go and get separate legal advice to him

Family member went bankrupt 3 years ago after basically ripping off his own Ltd company, massive Directors loans he couldn't repay and ripping off suppliers. He went personally bankrupt and his company was liquidated. He has a beautiful 5 bed new build, mortgaged, all that happened was that a charge was placed on his half of the property and come this year his personal bankruptcy is discharged.

He's had barely any fall out at all and continued to earn thousands in cash (construction trade) put through his partners account and hid major assets (expensive classic cars) from the Trustee in Bankrupty.

I doubt anything will happen, especially as the housing needs of your children will likely trump everything else.