Bankruptcy & beneficial interest.

[joyfuleyes]

DH & I are in a fairly dire financial situation (he was made redundant, again, today to put the tin lid on it). We've been struggling paying back the minimums on my debts & working on clearing his. We're seeing tha bank tomorrow & making an appointment with the CAB. DH will get his final month's pay on Monday.

I'm beginning to think seriously about bankruptcy for me.

The mortgage is in my husband's name & I have never contributed financially towards repayment, I haven't worked since we married (student then SAHM). My debts are three credit cards and my student loan. I have no income. I have my own bank account with about £2 in it and a joint back account which dh's salary goes into. We got married 9 years ago & DH bought the house 6 years ago. DH has some equity in it but it the mortgage is interest only atm.

The debts are for medical treatment, the purchase of the car (4 years ago) and 'making ends meet' when dh has been out of work. My only asset as far as I can see is my car which is worth less that £2,000. Since I've not worked since we married dh has made all the repayment on my debts up until this point - he's never missed anything. Including my student loans (which are a lot) it is about £25,000 in total.

If I were to be declared bankrupt dh stands a good chance of actually paying his debts back, which won't happen as things stand now.

My concern is how it would affect dh. We never, ever want to borrow money again but do not want to lose the house - could the house in some way be considered an asset of mine?

What in the house would be considered mine & could be sold to pay off debts? We don't have anything like an expensive TV. We do have a couple of ancient computers which are essential to DH's job (IT) but I have no idea who paid for them them.

Oh & my only benefit is child benefit.

best place to get confirmation on what would be attributed to you is www.moneysavingexpert.com go to the forums and post on the bankrupcty board.

If the house is in your husbands name and you have documentayion to show that he paid the deposit etc and has made all the payments then i believe the house is his affair only. ie you could be said to have a benficial interest as you are married but in fiscal terms he has made all the contribution.

Yes, you would have a beneficial interest in it as you have been contributing to the household in that time. What that amounts to can only be decided by an Official Receiver after you have gone bankrupt.

Their office decide how much your share is (using different and negotiable equations to some extent). Your dh's interests are paramount for the first 12 months and then after that you can be forced to sell as your creditors and their share comes into play.

In that first 12 months your dh could do many things, sell, remortgage to buy you out etc.

You may also be lucky with prices falling.

I only know the answer to this because I asked on www.debtquestions.co.uk a couple of years ago when I was considering it after the failure of my business.

Also note your share may be very small or negligible. The problem is you can only know that once you have gone bankrupt and then you are forced to accept the outcome.

My MIL went bankrupt just under 18 months ago. She had not worked throughout the marriage but had quite high debts.

FIL had to show all the documentation they had re deposit onn the house etc and the OR decided that her interest was negligible.

There were a couple of differences though, they are in their early 60's and had no other assets. Plus the mortgage on the house was still quite big with little equity.

Thanks for the replies. DH still has equity in the house & keeping it is a primary concern at the moment, I'm worried that in the current financial climate he wouldn't be able to remortage to buy out my interest.

We're seeing the CAB next week, I need to get really solid legal advice about where we would stand.

Yes, what worries me is that the deposit for this house (about £25,000) came from the sale of a property which was in our joint names although I neither paid the mortgage nor contributed to the desposit on that one (10 years ago).

Have a look at the insolvency helpline website, as they have quite a lot of information on the effects of bankruptcy.

It appears that 'in terms of Insolvency Law a non-working partner is deemed to have an equal beneficial interest in a property' ~ which would basically mean half the equity was an asset of mine & the house would not be safe.

We need serious legal asvice but frankly I think we're screwed.

Isn't there something like an IVA that will reduce the amount you have to pay back and freeze the interest.

If you have proper student loans you can defer them?

Also I am pretty sure student loans are exepmt so you would still be left with those anyway.

Can you not find work (any rather than just in the area you studied for) and then arrange a debt repayment plan?

Isn't there something like an IVA that will reduce the amount you have to pay back and freeze the interest.

If you have proper student loans you can defer them?

I wouldn't go down the IVA route, a debt management plan is a far better option and will still freeze interest.
However, as the op has no income she wouldn't be accepted for an iva.

"proper" student loans are exempt, student loans from a bank etc are not though.

The advice on the insolvency site is a worst case scenario, the OR looks at your case as an individual.
However, if they did decide that half of the equity was apportioned to you then you are not necessarily screwed.

It's unlikely that your hubby will be out of work by the time the bankruptcy is discharged, also, you could look for barwork or similar as an evening job when dh is home for childcare to up your income. That should allow your husband to remortgage and pay the equity share that is required.

Not an ideal situation but at least you wouldn't lose your house.

The other option is that you sell the house now, rent and put the equity into high interest savings leaving your half in your bank account and start again when work and finances are more stable.