Case study Ex declares bankruptcy in UK, what can I do with unsustainable mortgage?

A

Aquablue

Guest
My ex has moved to the UK to declare bankruptcy,

Our family home is now vacant and nothing is being paid off the mortgage. The bank want to repossess it. As far as I understand I will be responsible for the full amount of negative equity, approx 250,000.

Any advice on whether to voluntarily surrender or try sell the house?

I do not have the means to pay any of the neg equity.
Should I consider Irish bankruptcy or just wait to see what the judge says when the time comes?
 
Hi Aquablue

You and your ex are jointly and severally liable for the mortgage. This means that if he does not pay his share, you will be liable for it in full.

Once he goes bankrupt, he will no longer be liable and so you will "take over" his liabilitiy.

You should complete the Case Study format to get a full answer to your question.

In general, you should try to sell the house yourself to minimise the deficit and your liability. The Official Receiver in the Uk won't object to the repossession and you should not either.

Brendan
 
Personal and income details
Income self: 6,000 pa Part Time Accounts Administrator
Income history:I was made redundant from 30k salary in 2006, had two children and returned to part time work last year.
Income ex: Currently working in UK 40K
Income history: On Career break from Public sector 80K
number of children: 2

Home loan
Lender: PTSB
Amount outstanding: 470,000
Value of home: 260,000
Interest rate: Tracker 1.65%
Monthly repayment:1,700
Amount in arrears :36,000

Summary of discussions and agreements with the bank:
No mortgage paid in 2 yrs, bank seeking repossession

Other loans and creditors
Credit Card: 1,400
Family 6,000
Rent 800 per month

How important is retaining the family home to you?
Which of the following best describes your situation?

I don't care about keeping the family home.

Any other relevant information
Ex lives in Uk, I am currently renting.
What is your preferred realistic outcome?
For example: "I will never be in a position to repay the home loan. So I want to sell the house and deal with the shortfall"
 
Thanks Brendan and Bronte for your replies.

As you can see I have completed the case study form.

Bronte, I am working part time as I have two young children in school.

The house is vacant because when we separated my ex refused to leave the family home. After a few months of unbearable living arrangements, I left with the children and I am in rented accomodation since.
 
Ultimately you will lose the house. Given your income & asset situation I would have no immediate concers in respect of the residual debt (negative equity). No Bank will pursue you as it would not be worth their while. Technically you are fully liable (along with your ex) for the full amount of the loan, but realistically the Bank is unlikely to take any action against you, either now or in the future. Your immediate concern should be on housing & providing for your family & forget the debts, as you have no capacity to meet them!
 
I may have read the previous posts wrongly so correct me anyone if I'm wrong ...

The man in U.K. earns 40k p.a. -and can return to ireland in his public service job and earn 80k.

-and is seeking bankruptcy ?

Furthermore, by getting bankruptcy, he dumps all the debt on his wife who is now legally liable to pay the whole debt.

can this be right -legally and /or morally ?

has he gone ahead with the case ? Can someone object ?

I must have misunderstood. Surely, no way someone on secure 80k p.a. can pop over to UK become bankrupt because of his mortgage, which although high , is on a low tracker rate. And,worse, make wife liable for debt.

I'm sorry OP this is not concerning your psoition -just me being pzzled at your husbands actions ,and more puzzled if he can get away with it in a UK court.
 
oldnick said:
I must have misunderstood. Surely, no way someone on secure 80k p.a. can pop over to UK become bankrupt because of his mortgage, which although high , is on a low tracker rate. And,worse, make wife liable for debt.
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Technically this is perfectly feasible. As per steve Thatcher's posts his current earnings are only taken into account in the Bankruptcy calculations. The PDH is fully secured & in negative equity, so that would be sold to satisfy a portion of the mortgage. As he will be bankrupt, he will have no long term obligation to pay the residual debt. His wife is jointly & severally liable for the mortgage, so she would then be the sole source of recourse for the Bank, if they wished to pursue her for the balance.
 
yes, Brenadn44 ,I sort of knew that it was techincally feasible.
Basically I was expressing outrage at what seems such an inequitable judgement

("O.K. you can earn 80k p.a.. The bank payment is 20k p.a. Let your wife deal with the bank. You're scot free ").

i wonder if Mr Thatcher can advise - if the court knows that this man has a job worth 80k pa. sitting and waiting for him, and if the court knows it makes life even harder for his wife and children will the court still allow bankruptcy ?

Am I the only one who finds this really bad ?
 
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Thanks everyone for the replies.


Oldnick, unfortunately you haven't read my original post wrong. I am as frustrated and outraged as you. My ex is out to free himself of debt while dragging me into deeper debt in the process. Morals don't come in to it with the type of person he is.


The bank have sent me a letter saying they are about to instruct their solicitors to institute proceedings for possession of the property and that the procedure will incur considerable legal fees for which I will be liable.

My ex will probably have his bankruptcy through in the next few weeks.


I have been advised by everyone to get excellent legal advice, however I don't know where to start. I need to find a solicitor with experience and knowledge in this area and to have empathy for me in this very complicated situation. I would really appreciate any recommendations please.


I am under pressure to decide whether to put it up for sale or voluntary surrender. (The bank will allow me to try sell the house but will not stop the repossession proceedings while its up for sale).

If I put it up for sale, we may get more than surrendering it but the arrears increase each passing month that it is on the market. Also, I will be billed with the auctioneers fees of approx 6,000 as well as solicitors fees etc.


If I voluntary surrender will it be worse for me when dealing with the negative equity?


Like you said Oldnick, I wonder if the UK courts new the truth how would his bankruptcy case be handled??


I have contacted New Beginnings but they haven't got back to me yet, I don't know where to go from here....
 
I would let the bank reposess and let them deal with the current expenses. Chances are you will not be persued for the outstanding debt and even if you are, I don't see where you could be in any position to repay at the moment. Walk away and get a clean break from all the past.
 
Aquablue - i am so sorry for you. Your ex is not only shafting you but sticking two fingers to the rest of us.

i know you don't want to get involved but I wonder if a bit of publicity about this would ,hopefully, adversely affect the outcome of his case.
I still find it hard to believe that someone can relinquish a very well paid job , take a much lower paid job and tell the court how poor he is -knowing full well he can return to the higher wage at any time.

Would you be too scared to appear at that court and appeal against any possible decision ? would you make it public -Joe Duffy etc ?

I confess that i'm not only angry because of the personal affect it has on you, but at the possibility that anyone in ireland could do the same, including a lot of nasty men who can dump their partners and children in the xxx - and then return to Ireland debt-free and highly paid. Incredible !

Perhaps the bankruptcy expert Mr Steve Thatcher can advise as to whether full disclosure from or about this man would prevent a bankruptcy declaration.
 
Oldnick, I totally agree with the inequity of this situation. However, the current UK bankruptcy Courts do not take account of potential future earnings. this is quite apparent from the large number of high profile individuals, who having served out their bankruptcy term, have re-established themselves in large salaried positions. An appeal or publicity will not change the law. In fact the same course is open to Aquablue as to her husband. However it is not worth her while declaring for bankruptcy, given her low asset & income position. Technically she is fully liable for the outstanding mortgage debt and costs of re-posession. However, as specified in my earlier post & also by elcato, the Bank will not pursue her for these funds, as they would be wasting their time.
 
yes, Brenda44 I understand that future earnings are not ,and perhps should not be taken into account. I accept that normally a bankrupt should go out into the world with a fresh start and be allowed to make as much as he can.

But this guy is actually on an income of 80k which has chosen to put on hold ,earn a temporary lower amount during the necessary stay in UK before the court proceedings and then return to the higher income, which is guaranteed by Irish civil service rules. And that's allowed ?

That's besides the aspect of one half of a marraige running off to UK and shafting the other half. Again, in UK law does not the court take into consideration there's a wife and kids involved?

In this particular case the OP has not chance of paying. But what would happen if she had an income and maybe saved a few pennies or just received an inheritance ? She'd have to pay - he wouldn't.
 
oldnick said:
a lot of nasty men who can dump their partners and children in the xxx - and then return to Ireland debt-free and highly paid. Incredible !
Click to expand...

I agree fully. Any bankruptcy mechanism that facilitates this sort of carry-on is an abomination.
 
Hi Aqua

I share the outrage of oldnick and the others. But put that aside, for the moment, at least, and deal with the hand of cards you have been dealt.

I am under pressure to decide whether to put it up for sale or voluntary surrender. (The bank will allow me to try sell the house but will not stop the repossession proceedings while its up for sale).
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You must agree to sell this house yourself in an orderly fashion. Tell ptsb this. Let them appoint the auctioneer. Accept the first bid which comes for the property.

The costs of sale will come from the proceeds of the sale of the house. The solicitor's costs and the auctioneer's costs. The auctioneer might ask for some money up front for advertising. You should ask ptsb to pay for that.

The good news and there is some good news! Up to now, you would not have been able to sell the house as your ex probably would not agree. When he is bankrupt, you will be dealing with the Official Receiver who will agree to the sale of the house.

There is no advantage in allowing it to be repossessed. It will be sold as a repossessed property and the shortfall will be increased by a lower sales price, legal costs and security costs.
 
Dealing with the shortfall

Lender: PTSB
Amount outstanding: 470,000
Value of home: 260,000
Interest rate: Tracker 1.65%
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You face a shortfall of €200k + . As your ex will be bankrupt, you will fully liable for this, in theory, at least

However, some more good news.

  • PTSB won't be able to do anything about it as you have no assets or income
  • You should avail of the options under the new Personal Insolvency Bill
  • Better still, can you go to the UK for a year and go bankrupt?
This is another reason for staying in touch with PTSB and trying to get a deal from them. You will owe €200k of an unsecured debt. You will have no disposable income.



You should put a proposal to them under the Personal Insolvency Arrangement. The limit on this is 5 years, but there is no reason why you could not propose to write off the shortfall immediately. As of now, they will reject such a proposal, but it might be easier to get after the new legislation comes in.
 
It's better that you work with PTSB. Also better that you sell it as you will no doubt get a better price, thus reducing the amount owing. I would not expect for you to have any costs, either auctioneering or legal fees. These should come out of the proceeds of sale. You need to talk to the PTSB about this. Also you'll have to agree with an auctioneer that no fees until sale goes though. You'll probably need something from the PTSB to show to the auctioneer. I don't see any need for legal advice, especially when you cannot afford it. Maybe you're entitled to free legal aid.

Only comment on your ex is that he is some piece of work. Does he pay you maintenance?

The good news is that you'll get rid of the house, and hopefully as you've no income with the new insolvency regime the debt will be written off.
 
Thanks for the replies, I really appreciate the advice. I will speak to the PTSB asap.



How are you supporting the 2 children? How do you pay the rent?[/QUOTE]


Brendan, I have a court order for maintenance from my ex which covers my rent.
 
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