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Once couples with a joint loan who wanted to split just sold up and moved on. But, as Tony Levene reports, it's a nightmare now
When Carly Grant's relationship broke down three years ago, her former partner agreed to pay the mortgage rather than sell their jointly owned property. It was an acrimonious split and Carly sought legal help to ensure he didn't approach her again. Yet now she is being pursued by Halifax for £50,000 - it can't find her former partner - after the mortgage was not paid and the home was repossessed.
The tale is likely to be repeated up and down the country as tumbling property prices turn joint financial arrangements into a nightmare when couples split.
"We bought a house for £116,000 nearly seven years ago. At the time, we were madly in love and, while not married, we showed our partnership with a joint mortgage.
"This, I now realise, was a big mistake," she says. "The relationship was not always easy but it seemed to work and we had a child.
"By 2005, the value of our property had jumped to £200,000 so we jointly remortgaged with Halifax for £170,000."
"But soon after, our relationship came to an end ... silly things caused big rows."
Carly moved out and, because her mother lived in France, went to live in in a flat found by a charity.
"I wanted to sell the house quickly and be rid of it," she says. "All communications had to be through lawyers. My ex-partner said he wanted to stay in the house and would buy my share of the equity for £11,000. But this never happened.
"Then I discovered he had not been paying the mortgage as he had agreed. At the same time, I had rent to pay on my place. I went to court for an order of sale. He said he had found 'private buyers', but that fell through."
It was only when Grant saw the property advertised in the local paper that she realised it had been repossessed. It was sold in January for £140,000, a £30,000 shortfall on the loan.
Adding on his missed mortgage payments, the shortfall rises to £48,000. Halifax is also chasing Grant for a £2,000 overdraft on a joint account which she never used. "Now I owe £50,000," she says. "Before this, I had never had any debt. Halifax says it can't find my ex so it can legally chase me for everything.
"But he can be found - friends say they have seen him, so I can't understand why they don't go after him, although I don't want him to know where I live. He may be working. I'm not, so he could afford something."
In 2007, Carly found a new partner with whom she has had a baby.
"I now live with a man who is financially stable. He owns his house along with his mother, who lives with us as she is unwell. Halifax sent me a form to show my spending and my income.
"It insists I show my new partner's salary and that of anyone else living in the house.
"I am very frightened Halifax is trying to get the money from my partner and his mother - this would make everything very tough. I want to move on with my life, go back to college and get a better job when my baby is older. But this just depresses me - and no official seems to help."
National Debtline says Halifax has a legal right to demand full payment from either of the signatories, no matter how unfair it might seem.
It also has the right to demand regular expenditure and income statements to see what repayment, if any, can be afforded. But it has no right to ask for statements from other members of the household in this case.
"She should make a small offer to get the debt written off," it adds.
Halifax says: "We ask for details of other members of the household so we can get a fair overall picture of her income and spending. No party other than the joint debtors would ever be pursued for this debt.
"We are sympathetic to this situation but it is not for us to decide which one has the greater responsibility to pay the debt. We would look at any reasonable offer of payment, either a lump sum or monthly instalments."
What to do if you can't live under the same roof
Our relationship is in a total mess. I dread being under the same roof as my partner. Should I leave home? If you can, create an emergency escape fund with your own money and with cash borrowed from trusted friends and relations. List your bank account numbers, national insurance details, and have passports, cheque books and birth/marriage certificates ready in case you should need to leave quickly. If you can, read gas and electricity meters before going.
What should I do about earnings? Even if you don't leave home, assert your financial independence by setting up your own bank account. Most banks offer "basic" accounts which do not require stringent credit checks and allow you direct debits and cash machine access, but ban overdrafts.
Ensure you have no other relationship with this bank (or one of its linked offshoots, so don't go to Halifax if you have a Birmingham Midshires loan, for instance) as you need to avoid financial firms where you have a loan, credit card, mortgage (either in your own name or with a partner), or a joint account. This will prevent the bank to which you owe money using the right of "set off" where it can legally grab your cash to pay off debts which may have been incurred in joint names (see below) even if you did not spend the money.
Everything I have financially is in joint names. What do I do? Legally, you and your partner are "jointly and severally liable" for joint accounts and loans. This means either signatory is responsible. It doesn't matter who spent the money or how the loan has been so far repaid, banks can - and do - hassle whichever partner appears the easier for repayments.
Refuge, a charity which helps victims of domestic violence, says you should immediately contact the bank to freeze the account. You can do this on your personal instructions - your erstwhile partner can only unfreeze the account with a court order.
It is more difficult to close the account and take any credit balance. Some banks are more helpful than others, so ask. You should also ensure your former partner no longer receives statements - cash withdrawals could give clues to your new location.
Can I be chased for arrears on a joint mortgage? Yes. And again, lenders ignore the reality of which of you has the financial power. Mortgage providers do not have to find your former partner.
The property can be repossessed without your knowing while you remain legally liable for arrears and any shortfall between the price raised at auction and the loan.
Your debt will continue beyond any formal break-up such as a divorce, and carry on even if you enter a new relationship.
What should I do if I am pursued for a debt? Don't ignore this - it won't go away. Inform the lender you have no money or only enough for you and any children to scrape by on. Demand - especially if you are fleeing a violent situation - that the debt is written off.
You will be asked to fill in an income and spending statement - this is your way of showing how little you have. If you have a little money, be prepared to offer a sum such as £1 or £10 a month or perhaps a £500 lump sum for a mortgage, but ensure any such deal is in "full and final settlement".
But if you feel you have nothing to lose, bankruptcy could be an option.
• Contact Citizens Advice or National Debtline (0808 808 4000) or a similar organisation which should be able to help you claim any benefits you may be entitled to.
Refuge has a free guide, You Can Afford to Leave, from refuge.org.uk.
t.levene@guardian.co.uk
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