# Personal Insolvency & Joint Mortgage



## Dee1 (6 Jun 2012)

Hi Guys

Right heres the situation:
Bought house with ex in 2008 for €300k
Remaining balance is €275k
Value maybe €180k

I'm living in the house with our daughter and am a civil servant. He is now unemployed, with little chance of employment in the future. He's living with his girlfriend and their child in her house. 

He has multiple unpaid loans etc and contributes nothing towards our mortgage. He is anxious to get off the mortgage and deed etc, I am also anxious to get him off it. 

So my question is, could he go down the personal involvency route? if so, how would affect our mortgage? As it stands the mortgage is on interest only as I can't afford the whole lot on my own and obvioulsy this is not a long term solution so is personal insolvancy the answer?


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## Brendan Burgess (6 Jun 2012)

A very interesting question which I have not seen raised before in the context of the Personal Insolvency Bill. The Bill is at an early stage, so no one knows how it will affect you. 

I have raised the problem of former partners who are joint owners of a property in negative equity not being allowed to sell it. It hadn't really occurred to me that one might want to keep it. 

If he is a hopeless case and files for a Personal Insolvency Arrangement, the bank might agree to let him off the mortgage, especially if you are prepared to take over the entire mortgage. Obviously, you need to get him off the deeds as well. 

But you will have to wait until you see the actual legislation before you know if you or he can avail of it. 

I think you should make a submission to the Dept of Justice outlining your situation and you should make a suggestion as to what should be done to help solve this problem. Would your status as a civil servant carry any weight with the civil servant who is drafting the bill?


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## Wishes (6 Jun 2012)

A family member in a similar situation as OP.  The bank was informed that the non-contributing mortgage holder would be availing of the personal insolvency agreement and the other wishes to stay in the home and pay the mortgage.  Bank would not agree to removing the non paying mortgage holder off the debt or deeds but are aware of them being insolvent.  

The plan is to apply for a solo mortgage for the remaining debt on the house which would mean resubmitting documentation that supports you are capable of meeting the loan repayments.


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## Brendan Burgess (6 Jun 2012)

> The plan is to apply for a solo mortgage for the remaining debt on the  house which would mean resubmitting documentation that supports you are  capable of meeting the loan repayments.



An interesting approach. I presume that they are not giving up a tracker in this process

I think it would be very useful for those of you affected by this to make a submission, even at this late stage, on the Bill. 

Brendan


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## Wishes (6 Jun 2012)

Yes, it is a tracker mortgage on the family home.  The tracker will be lost when mortgage is re-applied for.


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## Brendan Burgess (6 Jun 2012)

Then you need to crunch the numbers on this.  

What is the downside in leaving the insolvent person on the mortgage?  Presumably, they can do a legal agreement with their ex to waive their ownership of the house and the mortgage? The bank could come after them for the mortgage, but is unlikely to do so. 

Is the house in positive equity? 

If the bank is changing the mortgage to a SVR, then you should insist on getting the balance reduced by around 10% to 20%. 

Brendan


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## Dee1 (7 Jun 2012)

Thanks for the advise Brendan. I think I will make a submission but can't help but thinking that it will fall on deaf ears! 

Based on the Bill as it stands, surely if my ex is declared insolvant this should include his mortgage debt. I'm thinking that maybe they might agree to take him off the mortgage (and deeds obviously) and allow me to buy his interest in the property at a reduced rate (or market value), and therefore reducing the amount owed (well heres hoping anyway). 

From his point of view what is the alternative? if he's insolvant he can't be expected to contribute to the mortgage and since he has no interest in staying tied to the mortgage or the property he should be taken off it. From my point of view I can't be expected to pay the whole lot when the agreement in the first place was for the mortgage to be paid jointly. 

I understand what you are saying about waiting until the Bill is published to see what exact provisions it included, but i'm just throwing out a few ideas here to see what people think. 

In my situation, the bank are more than aware of exactly what is going on and they have their own experience dealing with him and they know how difficult and uninterested he is in relation to this mortgage. Last year on two seperate occasions he took 2k from the mortgage feeder account which I had put in to pay the mortgage (which at the time was still in joint names so he was quite entitled to do so) and as a result the mortgage went into arrears for a while. So they know what little interest he has in what happens to the mortgage or his credit rating and i'm hoping this will help me.


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## wbbs (7 Jun 2012)

'From my point of view I can't be expected to pay the whole lot when the agreement in the first place was for the mortgage to be paid jointly.'

Depressing thought but is not the mortgage on the basis of jointly and severally liable so that if one cannot pay the other is liable for the lot, so in some ways it doesn't matter whether the other joint party is insolvent or not if you can continue to pay this is surely what the bank will expect.  I know obviously based on your income you cannot sustain that level of repayments but don't know what the solution to that one is .


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## Brendan Burgess (7 Jun 2012)

> From my point of view I can't be expected to pay the whole lot when the  agreement in the first place was for the mortgage to be paid jointly.



Actually, you can. It's not two separate mortgages. Your mortgage is a joint and several mortgage. You are both liable for the full amount of the repayments. If he does not pay "his" share, you must pay it.

If he is actually declared bankrupt, which is very unlikely,  the house would be sold and you would be liable for any shortfall.  In practice, you could do some sort of deal with the bank. 

But it's very messy. I really think that you should do a submission. My worry is that the Bill is being drafted in isolation from the real problems on the ground. 

Brendan


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## Dee1 (7 Jun 2012)

I see what the both of you are saying in relation to it not being 2 seperate mortgages. 

It might be an idea to go to my local TD and ask them to ask the Minister in a PQ if the legislation will have any provisions for a situation like mine. 

Might it be an idea for me to also seek insolvancy? with a view to just me keeping the house as i'm the only one of the 2 of us who will ever be able to contribute to the mortgage?


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## Dee1 (7 Jun 2012)

Looking your situation sounds pretty similar to mine alright. I had to open a new current account in my own name so the DD could come out of that one instead of the joint one. Although when I went for interest only they refused to allow it without his signature, which i eventually got. That period of interest only is nealy up and i've spoken to the bank regarding getting another year. The ex has said he wont sign the form again as 'he'd be doing me a favour'! so it will be interesting to see how the back reacts to that. 

Are you going to try remove him from the deeds without removing him from the mortgage?


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## wbbs (7 Jun 2012)

It is actually possible to remove a name from the deeds and not the mortgage, however might not be possible in your particular circumstances and in general most people would not agree to it anyway as they still have the debt and none of the benefit, if there is any benefit to owning a negative equity property, but in theory the value could rise.


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## Wishes (10 Jun 2012)

wbbs said:


> It is actually possible to remove a name from the deeds and not the mortgage, however might not be possible in your particular circumstances and in general most people would not agree to it anyway as they still have the debt and none of the benefit, if there is any benefit to owning a negative equity property, but in theory the value could rise.


 
This is an option that doesn't go down to well with the non-paying mortgage holder.  Once they get a solicitor involved any chance of the above happening goes out the window.

Looking2011, I see your point and agree it is maddness to take on a mortgage that would pay for the house twice over.  The mortgage is on a tracker rate, value of mortgage is 280k with 240k approx. still owing.  The house would be valued in and around 120/140k today.


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