DH huge mortgage shortfall - bank want to know about MY earnings to pay it back?

[quickMoneyQuestion]

Long story short - before he even met me, DH bought a house with someone else (not an ex!). He hasn't lived there for years and the other person has been paying the mortgage as they have been living there.

About 2 years ago that person starting having problems, we tried to help pay the mortgage but we can't really afford it now and nor can they.

So - they are selling. There is negative equity of about £50k and it looks like DH and the other party will have to go bankrupt as it is an impossible amount to pay off.

Before we get to that stage however, the sale is going through and the bank want to know how DH is intending to pay off the arrears. To the extent that they have asked him about MY income and salary. Well, I don't want to give this information, and nor do I want a penny of my income going to pay off these arrears - we have discussed it and would rather him go bankrupt.

My question is - am I legally liable for any of this? Do they have a legal right to ask about MY money and to expect me to pay some of it towards the arrears? None of this mess is to do with me at all and I already deeply resent the situation DH has put me in without having to pay any of MY money towards the mess!

I can only add to the posters suggesting you get proper advice - it's fairly contradictory on this thread!

In reality, if DH & the other owner of the property declare themselves bankrupt with no assets, the bank is not going to be getting much money back from them. Yes, DH & the other party will have part of their income deducted for a while to pay their creditors - but their creditors will still end up having to settle for a small portion of what they are owed. Because of this it would be hugely preferable for the bank if one of the parties had a wife, partner, mother, friend, fairy godmother who was willing to make repayments on their behalf. The bank no doubt realises that this will be their only option of getting the debt repaid in full. Lots of wives, partners etc. would do that if they could, to avoid their partner being made bankrupt - probably people with joint finances, joint assets etc., for whom a bankruptcy would have personal consequences. This is why the bank ask. NOT because you are obliged to pay.

Your DH being declared bankrupt will have an impact on you, but because some of his income will be deducted for a period to go towards his debts. Your income will be deemed relevant to this, as the Official Receiver will need to work out whether you are able to pay half of your household rent, bills & essential expenses yourself. If you were a SAHP, dependant solely on your DH's income for example, the Official Receiver would be able to take a lot less from your DH each month. At no point will anyone actually take money from you personally.

Proper advice will help you know exactly what to say to whom.

Yes, I can see the logic in that HPsauciness - better one of you has a good credit rating than none. I wouldn't, however, just assume letting my dh go bankrupt was the best option without seeking advice on what this actually means in the long term and what, if any, alternatives there are, given that however financially unattached you are to your dh, you are going to be seriously affected by his impecuniosity regardless, unless you are planning on leaving him altogether.

What serious implications roundabout? What is more serious than paying back £50,000?

That kind of depends on whether it really is £50,000 (where is this property, if it can still be £50,000 in negative equity in the current housing market?), how long the dh's credit rating will be affected for, how annoying it will be if credit providers erroneously link the couple financially when the DW applies for credit, how unpayable the debt really is, what the couple actually do for careers and whether a bankruptcy in their context would be particularly unfortunate, and what short, medium and long term plans all the options would be affecting.

What a shame that you could not get a buy to let loan from anywhere even using your income too. It seems so silly that that could not be arranged as it would have solved all the problems. To go bankrupt over £25k is a relatively small amount with huge consequences.

no you are not liable for his debts but if there is equity in a new house you own with him his half will be up for grabs by the lender as will his car and any other jointly owned assets (his half of them).

Why did the other joint owner not take in a lodger under rent a room scheme to try to avoid things getting this bad?

Basically, I would not be sitting back and thinking it's my dh's problem to sort out. As whatever is done would affect me as the spouse, I would want a full and thorough understanding of the consequences of any action or inaction and the effect it would have on me.

Read the thread Deo.

The OP says its £50k, no point questioning that.
Time credit rating is affected for is standard. You weigh up whether your need for credit is greater than attempting to relay £50k. A credit report is ONlY information for lenders and in some instances employers. However I think it's obvious OPs DH would know if he were in a job were a bad credit rating would affect his employment.

The Op can sort out any credit report issues. They are all correctable. She has clearly said there is no joint credit.

A credit report really isn't that important. It will drop off after 7 years and there are so so many variables (a huge one being whether it even makes it, I know a bankrupt whose situation was only reported to 2 out of the 3 main credit agencies. (If the third one was used for his search he'd be offered credit/ rentals no problem)

Honestly people are massively over egging how much a credit report matters in the context of the awful events the Op and her DH are actually going through.

once you marry you are financially "joined" in the eyes of banks and credit agencies and one person's debts affect the other.

As a pp said, posting absolutely twaddle like this is dangerous scaremongering. If you don't know the facts you really shouldn't be quoting things as gospel.

You are not financially linked to someone just because you marry them.

As soon as you have one joint financial account then you become linked and all your finances can affect the other but that cannot happen if there is no financial link at all.

The examples where posters have said the wife was affected by the husbands bankruptcy are quoting instances where that couple were financially linked- the OP is not financially linked to her husband.

I didn't think bankruptcy "dropped off" your credit record after 6 years, like CCJs do. I remember seeing questions on financial applications like, "Have you ever been declared bankrupt?"

Is there REALLY no other solution?

Yes, we must make sure everyone knows husband and wife are NOT liabile for each other's debts. Now it might look bad on a credit score if you are married to someone bankrupt or live at the same address but that is very very different from implying there is any liability.

If you do split up and are married (but not just living together) however and have debts (and assets) then debts are deducted from assets in whosever names they are in to do a split on a divorce in deciding who has what but that is a separate issue.

Anyway, isn't your DH liable only for half of that £50,000 debt? Could you repay £25k over a few years? £350 a month for six years would clear that debt. Is that an impossible amount?

It feels morally wrong to go bankrupt to avoid repaying debt.

There is visibility of 6 years data. The bankruptcy could easily be found at any time if it were looked for, but that is really neither here nor there. Many lenders only consider a few years credit data anyway. Creditors do understand that people have problems and it doesn't necessarily mean they can't be lent too 7, 10, 12 years on.
In fact many people Obviously become very conservative after a bankruptcy.

Of course a property could be 50k in negative equity in the current housing market. For a lot of the country, possibly even the majority, prices peaked around 2007 and haven't yet recovered. If DH and pal bought a new build in somewhere unfashionable in 2007 on a 100% (or worse!) IO mortgage, they'd owe massively more now than the house is worth. It would have to be a fairly bad buy followed by no real attempt to shift much capital, but that's easy done.

That really is huge negative equity for a property which was bought several years ago. Have you checked the bank's calculations?

Anyway, isn't your DH liable only for half of that £50,000 debt? Could you repay £25k over a few years? £350 a month for six years would clear that debt. Is that an impossible amount?

It feels morally wrong to go bankrupt to avoid repaying debt.

How can it be morally wrong? That's what bankruptcy is for. As a PP said too many people struggle along in unmanageable circumstances getting in more problems rather than declaring bankruptcy sooner.

It feels morally wrong to go bankrupt to avoid repaying debt

Then don't do it. But for people who can't repay debt, bankruptcy can be a sensible option. Keep your morals to yourself, where they belong.

OP, there is a lot of bad advice on this thread, from people who are just guessing. You need serious advice from a professional tailored to your own situation. No-one here can advise you at all.

It feels morally wrong to go bankrupt to avoid repaying debt

LOL at talking morals when dealing with banks and property valuations.

Prior to the crash banks colluded in overvaluing properties and lending unaffordable sums (did they really think all those self-certified mortgages were supported by a real income?) because they thought that prices would keep going up and they could easily repossess and get their money back if the buyer failed to pay.

Outside London and the South East, prices have hardly moved over the past few years and where I am in Yorkshire are only just back to 2007 levels and a couple of years ago they were probably still well below peak. In other places like Northern Ireland, they might not even be at that level now. And with new build, negative equity is very common.

Well, exactly, TheSecondViola - the OP has not given the impression that she is fully aware of the potential consequences of bankruptcy or any other option. Instead, she just gives the impression she wants nothing to do with any of it and resents being dragged into the fray. Unfortunately, whether she likes it or not, her dh's situation affects her and she should be out getting proper advice about it.

It feels morally wrong to go bankrupt to avoid repaying debt.

So you are against bankruptcy?

Maybe we should bring back debtor's prison?

Although, if we are going to remove all risk from lending, there's no longer a justification for charging interest.

Perhaps we should just ban usury altogether?

Instead, she just gives the impression she wants nothing to do with any of it and resents being dragged into the fray

Thats her own business. I think anyone would resent being dragged anywhere near a debt of 50k that they had no hand in making, wouldn't they?

Yes, but it doesn't mean you can bury your head in the sand, just because it isn't your fault, does it.

The only way she can have nothing to do with it is to leave her dh and start again on her own.

Why would she want to be dragged into it? How bizarre