Ex considering bankruptcy, could they take our house?

[Diege]

My ex is a sole trader running a fitness business. He rents a studio and I currently work part time for him. We have been separated for 3 years. He has a lot of credit card and bank loan debts, probably around £30k - obviously I don't have full details but he has talked to me about them in general. The business is struggling and he did say he may have to consider bankruptcy.

What effect would that have on me? We have a joint bank account, which he pays the child maintenance into but other than that he doesn't use. It is £4K overdrawn and he acknowledges that he owes £2k of that. I am hoping to get a loan shortly to pay it off and then remove him from the account and then take £2k from his share of the house.

We also have a joint mortgage which he pays nothing towards. I cannot afford to take him off it yet. Through mediation we have agreed a 60/40 split in my favour but have not put the paperwork through a solicitor yet. If he went down the bankruptcy route would they be able to make me sell the house?

Thank you in advance

[Debt Camel]

Re: Ex considering bankruptcy, could they take our house?

How much equity is there in it?

[Diege]

Re: Ex considering bankruptcy, could they take our house?

Approximately £150k

[Debt Camel]

Re: Ex considering bankruptcy, could they take our house?

So his 40% of the equity would more than clear his debts. If he goes bankrupt, your house will be sold.

He (and you) need to look at what the alternatives to this are. The first thing is the question of whether his business is viable. If it is, but he can't manage the amount of personal debt he has built up, then there could be options such as an IVA that might work for him. I suggest he should talk to Business Debtline about this https://www.businessdebtline.org/

[Diege]

Re: Ex considering bankruptcy, could they take our house?

Thank you. He doesn't listen to anything I have to say, so I think I need to try to concentrate on getting him off the mortgage

[Diana M]

Re: Ex considering bankruptcy, could they take our house?

We have been separated for 3 years. He has a lot of credit card and bank loan debts, probably around £30k - obviously I don't have full details but he has talked to me about them in general. The business is struggling and he did say he may have to consider bankruptcy.

What effect would that have on me? We have a joint bank account, which he pays the child maintenance into but other than that he doesn't use.

Why not open a bank account in your sole name since you have been separated for three years. You could have any child maintenance paid into that. Maybe it's time to act independent

Are his credit card and bank loan debts his personal debts or business debts. Some of them may be unenforceable in court if they were opened before April 2007.

You say he's talked about them in general but if your financial future and any children's future could be effected by his choices then maybe you have the right to know a bit more detail.

You say you're paying all the mortgage but "cannot afford to take him off it yet". Common sense says you can (since you're paying it!) but does the lender say different?

He may want to consider bankruptcy to escape his business debts but you should consider all your options before supporting him in that route.

On what basis was the Mediation split 60/40? If there's £150k equity in the property and he has £30k debts is BR or an IVA really necessary?

Is he employable even if he ceased to run his own business?

Di

[Diana M]

Re: Ex considering bankruptcy, could they take our house?

and I currently work part time for him.

Is your income dependent on his business?

Di

[Debt Camel]

Re: Ex considering bankruptcy, could they take our house?

If there's £150k equity in the property and he has £30k debts is BR or an IVA really necessary?

Well presumably not if Diege can remortgage to release his share.

But if her only income is p/t employment and child maintenencxe, the chance of the mortgage lender agreeing to let her remortgage on her own are probably about zero. She is highly unlikely to get through the affordability calculations.

But it's still an important question as to whether his business is solvent. We don't know at the moment if it is a Ltd company or being run as self employed either.

[Diana M]

Re: Ex considering bankruptcy, could they take our house?

But it's still an important question as to whether his business is solvent. We don't know at the moment if it is a Ltd company or being run as self employed either.

My thoughts were on the basis that the OP said in her first post that her ex is a sole trader.

My ex is a sole trader running a fitness business. He rents a studio

Di

[Diege]

Re: Ex considering bankruptcy, could they take our house?

How annoying - I posted some answers this morning but it doesn't seem to have worked!

So:

I will take him off the joint account shortly - I didn't want to do it until I had agreement from him that he owed half of it. I have a sole account that I use for all my day to day expenses.

He has a business overdraft and credit card, then some personal loans and cards but he has also used them to pay for business stuff.

The lender will not take him off the mortgage as my salary is too low at the moment. I am looking for a job that will pay me enough so I can take it on.

We agreed the 60/40 as he isn't living here or contributing to the mortgage. I have to sell when our youngest is 18 (5 years from now).

He is a personal trainer so is always employable and has a following, so he would be able to earn money.

I am not sure how serious he is about bankruptcy but I know the business isn't doing brilliantly. He is currently cutting as many costs as he can and if I find a new job then he'll save my salary as well.

[Diana M]

Re: Ex considering bankruptcy, could they take our house?

The lender will not take him off the mortgage as my salary is too low at the moment. I am looking for a job that will pay me enough so I can take it on.

We agreed the 60/40 as he isn't living here or contributing to the mortgage..

You may find a different lender willing to give you a remortgage even if your current lender won't co-operate when the time comes.

Was your Mediation agreement legally binding and did it account for any future variables such as your ex's (or your) change in financial circumstances?

What happens if either of you gets a new partner? Or was it a 'clean break' based on sharing the equity built up in the property?

Di

[Diege]

Re: Ex considering bankruptcy, could they take our house?

We still need to take the agreement to a solicitor but as it's not cheap to do I haven't been able to afford to. We've agreed that he's entitled to 40% of the value at the time I take him off the mortgage.

He already has a new partner. And yes, it's a clean break. I have no claim on his pension and I haven't asked for spousal support.

[Diana M]

Re: Ex considering bankruptcy, could they take our house?

We still need to take the agreement to a solicitor but as it's not cheap to do I haven't been able to afford to. We've agreed that he's entitled to 40% of the value at the time I take him off the mortgage.

He already has a new partner. And yes, it's a clean break. I have no claim on his pension and I haven't asked for spousal support.

I'm not a Family Lawyer but I have been divorced

Perhaps it's no bad thing that you haven't had the time or money to finalise the agreement without taking independent legal advice.

Have you any idea what his pension is worth? I think the law changed not so long ago to allow you to cash in pensions (partly tax free) etc. I can't give financial advice but has he considered doing that to clear any of his own pressing debts in preference to going BR which would put your home and his child's home at risk?

Just be sure that any decision taken is in your and his child's best interests not something his new partner is pressuring him to do. She might not be , but a healthy dose of cynicism does no harm at times like these.

Di

[Diege]

Re: Ex considering bankruptcy, could they take our house?

I've just been to the bank and they have confirmed that they will take all my income into account, not just my salary, and they will lend me enough money to buy him out. I can't tell you how excited I am about this! I can also borrow an extra £10k to give him and then pay him the outstanding money within 5 years.

So, once he's off the mortgage does that mean he no longer has any right to move back in, leave his stuff here (half of the garage is filled with his things at the moment) or have a key?

[Kati]

Re: Ex considering bankruptcy, could they take our house?

oh well done you xx
[MENTION=87380]Diana M[/MENTION] will know more on the 'legal' side of it xx