My friend lives with her boyfriend and young daughter. They have a mortgage on 50% of their house - the other half is rented from housing association. They both work full time.
She has recently discovered her boyfriend has run up debts of £60k which they are struggling to meet the minimal payments on along with their mortgage/rent etc; and she can hardly afford to buy food/petrol.
He wants to go bankrupt. My advice to her was to apply for an IVA as an alternative. She has made a provisional phonecall to discuss whether he would be suitable and it seems he probably would.
Her fear is that she will lose her house or have to remortgage the half they own to clear down his debts - and I do not know the answer to this.
Given they are not married and they jointly own the equity in half of the house, would anyone know where she would stand financially in all this mess? Will she lose her house anyway - could he be forced to sell his quarter share? Is an IVA a solution?
2006-11-15 21:29:21 · 9 answers · asked by lisaandmax 2 in Business & Finance ➔ Credit
possibly - she needs to talk to the Citizens Advice about it.
if he goes bankrupt the official receiver does not want the agro of dealing with the house so they will allow her to buy out his share of the equity for cost + admin fee. so lets assumne the house is worth £100,000. Their half is worth £50,000 and thie mortgage to pay off today would cost them £40,000. their equity is therefore £10,000 so she would have to give the receiver £5,000 + admin fee (its about £250) and then she would own their half of the house outright. The receiver would use that money to pay off some of her boyfriends debts.
if she cant buy his half of the equity out then the official receiver will have the right ot sell the house out from under them. If they have kids then there is a clause that gives them sometime to sort out anther place to live (used to be a year when bankruptcy's were 3, dont know how long it is now) after which they can sell it out from under them.
IVA means that a payment is made for probably 5 years every month and this is used to pay off debtors. 70% of them have to agree to it though. they usually do because its better than them getting nothing from a bankruptcy. They will usually ask for the house to be re-mortgaged at the end of the period to give them a lump sum at the end to clear as much as possible before the rest gets written off.
the housing association bit might throw things a bit of a kilter so i would check with CAB.
2006-11-15 22:39:17 · answer #1 · answered by alatoruk 5 · 0⤊ 0⤋
With an IVA, they do not need to include their house - it is safe, providing they keep up the IVA payments. If they go bankrupt, the house is history, although there are some provisions made as they have a young child. IVA is the solution. Credit will be affected, but I should imagine, this is already the case, so really they have nothing to lose. Also, keeping the house I would think is their priority over getting more credit, such as credit cards.
2006-11-16 02:43:53 · answer #2 · answered by ribena 4 · 0⤊ 0⤋
Hello, Oh! dear what a dreadful mess they have got into. OK! lets see if we can untangle this abit from the facts you've given me.
1) Bankrupcy is NOT the best option here in my opinion because with bankrupcy they definately will loose the house or share of the property.
2) IVA's YES! definately the better option here, why? because it allows the person to keep their property and so is obviously the better long term method. Also Bankrupcy is a much more costly legal process where as IVA is cheaper.
3) The Debit run up i.e. the £60K. This is owned and is the responsability of the person (NOT the couple as an entity) who ran it up. So its really technically HIS problem NOT hers, he ran up the debit. Its the long term consiquences of his debit that affect her and the child too.
4) Go to the consumer credit counselling service, they are an excellent charity and are VERY helpful with cases of this kind. In adition the CCCS DONT charge any fee's for debit problem resolution, where as many debit busting companies are just sharks and will charge a % of the debit to help clear it down. The average debit company fee is about £6000 to help you clear you debit problem. CCCS is totally free.
**You can yahoo or google for the CCCS website, sorry! I dont have it to hand just now..
**Try and avoid a remortgage as its only creating yet more debits, when in a hole stop digging,etc.
Best Regards IR
2006-11-15 21:46:59 · answer #3 · answered by Anonymous · 1⤊ 0⤋
The most likliest outcome of this situation is your friend's boyfriend will not be able to pay off his debt any time soon. Which means, she will continue struggling to afford food.
I honestly dont think the IVA solution will help much.
Your friend made a bad decision in sharing the house with her irresponsible boyfriend. She needs to make a decision right now to continue struggling with him and hope he will pay off his debt. Or allow him to file bankruptcy and move on with her life.
2006-11-15 21:44:39 · answer #4 · answered by Go For Broke 3 · 0⤊ 0⤋
I'm not from where you are but I have been working for insolvency practitioner (like a bankruptcy trustee).
Even if they were married, no one can touch her share of the property. This is unless she agrees to share the burden by offering her share of the property. But, yes they can force them to sell but they will give her her money regardless. An IVA sounds like a deed where you agree to pay in instalments etc etc - right? That would be best. Just make sure SHE protects herself and not promise to help pay or anything like that.
2006-11-15 21:37:56 · answer #5 · answered by Xonja 2 · 0⤊ 0⤋
they need to go see a non-profit making debt counsellor and quickly...an IVA is not an easy solution..please tell them to go se someone soon
2006-11-15 21:38:20 · answer #6 · answered by Anonymous · 0⤊ 0⤋
She needs to leave her husband if he can no longer administration the funds, you will desire to tell her father earlier its too late. hopefully you will get her to take heed to you and her dad, if she does not ... nicely possibly shes a sort of types that needs to hit all-time low earlier she wakes up and gets her residing house suitable!
2016-10-15 15:07:45 · answer #7 · answered by Anonymous · 0⤊ 0⤋
this is a sorry state of affairs.your Friends partner is a toerag.tell your friend to go to citizens add vice.they will be a great help;
2006-11-15 21:37:15 · answer #8 · answered by Anonymous · 0⤊ 0⤋
see http://teddykinetic.blogspot.com where there are numbers for debt advisors.
2006-11-15 21:40:06 · answer #9 · answered by teddykinetic 3 · 0⤊ 0⤋