Will wife going bankrupt affect my mortgage which is my name only??

[Emeyetee]

My wife has debts in excess of 30k with no means of paying these off, even through an IVA.
The debts are all personal debts and mainly credit cards all since before we met and in her previous married name.
we married nearly 2 years ago and I have lived in our home and had the mortgage in my name prior to us being together and been living in our family home for nearly 9 years.
my wife and I have separate bank accounts, we have no joint debt and the mortgage is in my name and so are the title deeds.
i pay the mortgage and all household bills as my wife is a stay at home mum and what little benefit and child maintenance from previous partners she receives goes towards feeding the family.
if she files for bankruptcy, would the official receivers look to my mortgaged property in order to contribute towards her debt? Or, as she has not contributed towards the deposit or mortgage for the property would I be right in thinking that she has no beneficial gain from what equity there is in the house?
she has spoken to 2 separate debt advisors and each has said that as we are married the official receiver would look for a percentage of the equity in the property but 1 that I have spoken with says that it seems as she has not contributed in anyway towards the property that it would be safe as in my name solely but recommended I seek legal advice and clarification.
So, if you are still reading this and I thank you, can you offer any pearls of wisdom as I would greatly appreciate it.

[Nibbler]

Re: Will wife going bankrupt affect my mortgage which is my name only??

Property in bankruptcy is one thing that always gives me a headache, but as far as I'm aware....

Unless there is some kind agreement, constructive trust, or contribution to the property or mortgage resulting in extra value or equity, then the presumption is that no beneficial interest will accrue and the full interest would follow the legal ownership/title.

She has not contributed to the mortgage so she cannot have accrued BI by increasing equity by helping pay that off. Likewise, she has not funded repairs or renovations/improvements that could have increased the value and accrue a BI that way.

See the Official Receiver's guidance manual here: http://www.insolvencydirect.bis.gov....4.htm#31.3.129

Points in there generally refer to cases where the bankrupt already has some interest, but the principles on how and when additional (or in your case any) interest can accrue are effectively the same.

As always though, you should seek advice from a debt advisor who is familiar with the finer points of insolvency.

Not all are by any means.

[FlamingParrot]

Re: Will wife going bankrupt affect my mortgage which is my name only??

My wife has debts in excess of 30k with no means of paying these off, even through an IVA.
The debts are all personal debts and mainly credit cards all since before we met and in her previous married name.

There are many people with debts higher than that who are not looking into an insolvency solution, someone I know owes £150k :scared:

IVAs are often promoted as an easy way to manage your debts, at one point I thought exactly that, only when you look at them in detail, they are actually a form of insolvency just like bankruptcy, only in this case you are expected to make payments for a period of 5 years (usually) and there's normally a minimum level of repayment to be considered, often £200/month or more. A lot of the money paid into an IVA goes towards covering the Insolvency Practitioner's fees, which run in the thousands.

we married nearly 2 years ago and I have lived in our home and had the mortgage in my name prior to us being together and been living in our family home for nearly 9 years.
my wife and I have separate bank accounts, we have no joint debt and the mortgage is in my name and so are the title deeds.
i pay the mortgage and all household bills as my wife is a stay at home mum and what little benefit and child maintenance from previous partners she receives goes towards feeding the family.
if she files for bankruptcy, would the official receivers look to my mortgaged property in order to contribute towards her debt? Or, as she has not contributed towards the deposit or mortgage for the property would I be right in thinking that she has no beneficial gain from what equity there is in the house?
she has spoken to 2 separate debt advisors and each has said that as we are married the official receiver would look for a percentage of the equity in the property but 1 that I have spoken with says that it seems as she has not contributed in anyway towards the property that it would be safe as in my name solely but recommended I seek legal advice and clarification.
So, if you are still reading this and I thank you, can you offer any pearls of wisdom as I would greatly appreciate it.

Bankruptcy is a drastic solution and should be considered only as a last resort. IMHO, I wouldn't consider it for unsecured debts of £30k. :nono:

Before going further down the insolvency route, it would be useful if you could tell us a bit more about your wife's debts, as there are alternatives to dealing with them that don't involve sacrificing your family home. :thumb:

It would be useful if you could tell us:

• Type of debt (credit card, loan, catalogue, overdraft, etc.)
• Approx. outstanding balance
• Original lender (bank or finance company) and current owner (if assigned to a DCA)
• Approx. date when the credit was obtained
• Approx. date of last payment
• Whether any payments are still being made

[enquirer]

Re: Will wife going bankrupt affect my mortgage which is my name only??

Advice as per Nibbler and FlamingParrot ('I wouldn't consider it for unsecured debts of less than £30k').

If she were to opt for bankruptcy, then your problem will be proving a negative - that she has no interest and has never contributed. Strictly speaking, you shouldn't have to prove anything, but in reality you can expect to be challenged.

If this is the route chosen, then you should certainly seek specialist advice.

[Debt Camel]

Re: Will wife going bankrupt affect my mortgage which is my name only??

I am baffled by the argument that someone with 30k of unsecured debt and no significant income should not consider bankrupty as a sensible debt solution. Especially in a situation where there would not seem to be a need to apply for a mortgage in the next few years.

Regarding the beneficial interest, the OR's starting point will be that beneficial interest follows ownership. If you already owned the property for a considerable time before she moved in (it is the moving in date which is relevant, not the date of marriage) and she has not make any contributions to the mortgage or household bills or property improvements it would seem to me to be unlikely that the OR will think she has any beneficial interest.

See from the OR's guidelines:
31.3.144 Contributions to the property leading to a beneficial interest
It will be difficult for the non legal owner of a property to rebut the presumption of equity following ownership (see paragraph 31.3.130) unless they have made some financial contribution to the property.
Fulfilment of domestic duties alone will not be sufficient to demonstrate a beneficial interest [note 44].

[FlamingParrot]

Re: Will wife going bankrupt affect my mortgage which is my name only??

I am baffled by the argument that someone with 30k of unsecured debt and no significant income should not consider bankrupty as a sensible debt solution. Especially in a situation where there would not seem to be a need to apply for a mortgage in the next few years.

It all depends on the individual circumstances. It is a drastic solution which can affect many areas of your life, not just your ability to obtain a mortgage. Although most people would be automatically discharged after a year, it will remain on file for 6 years and there are times when you may be asked the question as to whether you've ever been insolvent/bankrupt. :ohwell:

Going bankrupt can affect your ability to find a suitable place to live as a tenant as well as your current employment and future prospects. I've spent many years working in the financial $ector where a simple default on your credit file can stop you from getting a job, even as a 'temp' or contractor, even in a non-financial capacity such as in IT, HR, marketing, etc.

Bank accounts can be a nightmare, and in this day and age, it would be very difficult to live without one. :mmph:

Apart from the likelihood of losing your home, you may also have to dispose of some other assets you own, probably not most household goods but motor vehicles over a certain value, jewellery, works of art, etc. could be sold.

Even after discharge, you may have to keep making payments under an IPA for a number of years. The OR will have to be informed of everything that goes on in your life and keeping anything from the OR can constitute an offence. :mod: Even with a CCJ you don't have such obligations. You may need to declare your income and expenditure but not your assets. If you own your home, a creditor may obtain a charging order once they've obtained a CCJ but you can still keep your home, car, etc.

BR may be OK if you have no money, no assets, no job and this situation is not likely to change in the next few years, or if you have massive debts (much more than £30k) that you couldn't handle in any other way.