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Original poster

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

222 replies

quickMoneyQuestion · 06/01/2016 06:05

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!

OP posts:
Walkingintheraindrops · 06/01/2016 14:01

Deo: Some properties went up a lot in the last 2 years - £100k in London easily on small flats but sounds like that is not the case here and everything is just too late and no point crying over spilt milk. Yes take legal advice and ideally don't let him go bankrtupt if you can avoid it.

Why do people keep saying this? What is the alternative to bankruptcy? Paying it back. How on earth do you suggest they do that and what sort of legal advice could help them get £50k?

DeoGratias · 06/01/2016 14:17

Pay off the debt - the morally good way of course. We don't all go by just law. Many of us have a moral code that we don't renege on debts and promises to pay.

expatinscotland · 06/01/2016 14:19

REALLY hope you get some proper legal advice. Bankruptcy exists for a reason, the person cannot pay back the debt.

Walkingintheraindrops · 06/01/2016 14:21

With all due respect, repaying £50k at massive detriment to yourself (£350 a month was mentioned above, that will be over 10 years even without interest) for a loan on an asset you no longer own is plain stupid. It's the kind of thing it's very easy to be black and white ably from the safety of a keyboard, with no experience whatsoever of what is actually like. literally, no idea.

roundaboutthetown · 06/01/2016 14:27

Proper advice definitely the way forward. I'm now confused: is this not a sale forced by the bank to get back what it can from the debt? Why would the bank stop the sale unless it didn't believe a better sale price could be achieved? Presumably the OP's dh is only in immediately repayable and unaffordable debt of £50,000 if he sells to the proposed buyer at the agreed price? Is it definitely the only option?

Walkingintheraindrops · 06/01/2016 14:29

It's just a normal sale. The bank may block it because it's being sold for less than the mortgage which they usually don't allow. However if the alternative is repossession and selling it themselves they may just allow it and deal with the debt afterwards. From what the OPs said the bank and her H are currently in negotiations around this, which is why they asked for her financial information

BarbaraofSeville · 06/01/2016 14:42

If the rental income is anywhere near the cost of an interest only mortgage, it seems incredibly short sighted of the bank to not allow the property to be rented out, especially if sale of the property now will lead to the ex-owners going bankrupt and not paying back some or all of the debt.

Bearbehind · 06/01/2016 14:44

Pay off the debt - the morally good way of course. We don't all go by just law. Many of us have a moral code that we don't renege on debts and promises to pay.

deogratis your moral high ground is actually pretty offensive in this situation.

They don't have £50k and have no way of getting it. It's not a situation they planned but the house the DH had purchased went down in value- it's not like he's gambled it away of something.

If this sale doesn't complete the bank will reposses the house, either way there will be a fairly immediate shortfall to be repaid.

How the fuck do you think they can possibly pay it back and comply with your superior moral code?

Bearbehind · 06/01/2016 14:50

Why would the bank stop the sale unless it didn't believe a better sale price could be achieved?

The bank won't stop the sale just for the sake of it but they will need to know how they are going to get their money back, hence the questions the OP first posted about.

Once the property is gone, so is any security on the loan and bankruptcy will lead to them having to write off the shortfall so they will want to be sure there s no other recourse.

FannyTheChampionOfTheWorld · 06/01/2016 14:53

I missed the free half hour bit gruntledone. That's the fourth time in about a fortnight I've seen a thread where someone has assured the OP that half an hour's free legal advice would be forthcoming!

(bangs head against wall)

Want2bSupermum · 06/01/2016 14:53

I have zero sympathy for banks and quite frankly the bank should have done their research before lending so much on a property that was at risk of losing so much in value.

The only thing I would suggest to the OP is that they think about what they want to accomplish in the next 10 years because a spouse declaring bankruptcy will most probably affect those plans.

TheSecondViola · 06/01/2016 14:53

Pay off the debt - the morally good way of course. We don't all go by just law. Many of us have a moral code that we don't renege on debts and promises to pay

Clearly you've never been in the situation where it isn't possible for you to pay what you owe. What the fuck have morals got to do with it if I owe 100k but have no money or prospects of money?

It's empty and useless rhetoric. And its smug. Take it elsewhere.

fidel1ne · 06/01/2016 14:55

It's empty and useless rhetoric. And its smug. Take it elsewhere.

Deo is very lucky. If she needs a hefty lump sum she writes a book or sells an island. It is understandably very hard for her to understand the affairs of mortals.

FannyTheChampionOfTheWorld · 06/01/2016 14:56

I did wonder that barbara. Maybe the house is in a mess. I know banks sometimes leave owner occupiers who are in NE in situ, if the house is never going to be worth what they owe. Particularly common with people who borrowed more than 100% and/or remortgaged I think. The thinking being that instead of a debt they're never going to get cleared, they might as well have eg £500 a month indefinitely.

Bearbehind · 06/01/2016 14:57

I have zero sympathy for banks and quite frankly the bank should have done their research before lending so much on a property that was at risk of losing so much in value.

Bloody hell- they're all out today Hmm

Where exactly would they have got the crystal ball that predicted a housing market crash want2b?

expatinscotland · 06/01/2016 14:58

'Many of us have a moral code that we don't renege on debts and promises to pay.'

Good for you. Here, here's a Star. For the rest of the planet, there's bankrupcy, a legal construct there for people who can prove they are unable to pay back the debt.

FannyTheChampionOfTheWorld · 06/01/2016 15:01

I'm not sure they'd have needed a crystal ball to figure out that letting people borrow 100%+ interest only, seven or eight times income, or totally self certifying was a risky little game bearbehind.

roundaboutthetown · 06/01/2016 15:04

No crystal ball was ever required to predict the crash. A crash was always inevitable. When it would happen is what was unpredictable.

Bearbehind · 06/01/2016 15:08

Maybe so fanny but we don't know that this was the case here; the post I quoted specifically mentioned the house value dropping, not the borrower being over extended in the first place.

FannyTheChampionOfTheWorld · 06/01/2016 15:23

It also mentioned no sympathy with the banks generally bearbehind. If you're saying you were only referring to the second sentence you quoted and not the first at all, then you've still not told us why you think a crystal ball was needed. Either to predict a crash at all, or to know that lending the amount they did in this specific scenario was a bad idea. After all, plenty of sensible lending was done in 2007, even on properties that were at the peak. There are people who bought at the top of the market who, because of their significant deposits, aren't in NE.

Bearbehind · 06/01/2016 15:31

The point I was making was in response to the post about this situation being the banks fault because they should have researched the situation further and realised the price was going to drop.

It is ridiculous to suggest that is possible.

Yes the market was always going to correct at some point and probably will again but there are a multitude of factors to consider. For all we know the house could have been in profit at some point- should the bank have told the owners to sell it then? Hmm

To suggest this situation is the banks fault is not only naive but completely pointless.

laulea82 · 06/01/2016 15:35

You have zero responsibility for his debt. They are being cheeky asking for your information! I work refuse if you do not wish to help with the debt. In bankruptcy what is relevant is your DH's income and expenses and since you share bills and household expenses etc they will consider your contributions to see what HE can afford to pay. Trust me when I say you have no liability for his debt. The fact you're married makes no difference. That is an urban myth.

laulea82 · 06/01/2016 15:38

Oh and they can't refuse the sale unless it's at undervalue. Shortfall or no shortfall.

TheSecondViola · 06/01/2016 15:38

They can refuse the sale. They hold the deeds, and don't have to release them without a plan in place to clear any residual debt.

FannyTheChampionOfTheWorld · 06/01/2016 15:39

You have no idea whether it's ridiculous to suggest it was possible for the bank to know the house was going to drop in price significantly below the amount borrowed, though. You can't know that without information on when the house was bought, the value then, the location and the amount borrowed.

And your suggestion that banks would need a crystal ball to predict the crash is bollocks generally. There was plenty of analysis at the peak explaining why it couldn't continue. Banks had the option of whether to listen to it or not and chose not to. Suggesting a crystal ball would be needed to know a crash would occur, which is what you originally said without any caveats about timing etc, is idiotic. It was never going to be able to last.