JOINT DEBT AND BANKRUPTCY

[pm.e]

Hello,

Can anyone help with regards to a joint debt and bankruptcy?

If I petition for bankruptcy, my wife will be come liable for the whole amount?

My question is, what is the point of this? I thought that my part of the debt would become null and void and that my wife only becomes liable for the remainder of that debt.

We have N.R to thank for all of this mess.

[MelanieGiles]

Hi pm.e

Yes - if you are to petition for your bankruptcy, your wife will become responsible for paying the joint debt in full. When you borrow money together, you borrow it jointly and severally - which means that you are both liable for the lot. Perhaps your wife will also need to consider bankruptcy proceedings in her own right?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[pm.e]

Hi Melanie,

I thought of this, and I think its best for a couple of reasons that I petition first:

1) So that my wife can buy out my beneficial interest in the property when I go bankrupt, and so we keep the house.
2) Perhaps after my automatic discharge, my wife will petition for BR, and I buy out her share of the beneficial interest in the property at a later date when I am solvent in 12 months time.

This hopefully will all mean that we keep the house.

Does this all make sense?

[MelanieGiles]

An interesting concept! Can your wife cope with the ongoing creditor repayments in the meantime?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[pm.e]

Good idea then?

My wife has about 10% of the amount that I owe, and she will continue making the small amounts until then.

Is this feasible?

[MelanieGiles]

I do not see why not - but if your wife can continue to make the payments throughout your bankruptcy, why would she want to go bankrupt after you receive your discharge?

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[pm.e]

Hi Melanie,

Because NR have secured a charge on the beneficial interest of my wife interest in our property. (only my wife interest)

At least if my wife goes bankrupt after I am discharged, I was thinking that my wife petitions for bankrupty, I buy my wifes interest say for another £1, and NR are out of it with no charge?

Is this feasible?

[MelanieGiles]

But why would she want to go bankrupt as a result of a secured charge? Secured creditors' rights are not affected by bankruptcy proceedings, so that debt would need to continue to be paid regardless.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[MelanieGiles]

But why would she want to go bankrupt as a result of a secured charge? Secured creditors' rights are not affected by bankruptcy proceedings, so that debt would need to continue to be paid regardless.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[pm.e]

The charge is quite significant, over 50k.

I was hopeful that there was some loophole around this.

I dont want this sigificant charge over our home for the remainder of the mortgage, and if through bankruptcy this could be overcome, then we would consider this at a later stage.

I suppose the OR has to look at this when considering if the property has any equity?

Do you have any thoughts on this whole issue?

[MelanieGiles]

I don't see how you can overcome a secured charge in bankruptcy. A secured charge is exactly that - secured. It relies upon the value of the asset, and cannot be left behind in bankruptcy. This charge will remain on your property until it has been paid in full, and if you sell it will have to be discharged from your wife's share of the proceeds. Therefore if she buys out your beneficial interest following a bankruptcy, this will be secured against the full value of the property.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[pm.e]

Hi Melanie,

What I am unsure of is what happens if the property has negative equity?

Say my wife buys out my beneficial interest, can I then buy back that from her after my discharge?

I am confused. Are you saying that even when my wife buy's out my interest in the property as long as payments are made in respect of the charging order, it will remain just that? ie. just keep paying the charging order?

What confuses me even more is that on the charges register of the property it says 'No disposition of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by the applicant for registration or his conveyancer that written notice of the disposition was given to NR, being the person with the benefit of interim charging order on the beneficial interest of my wife made by XXX Court dated XXX (Court ref)

We have this, and a second similiar note on the proprietor register and I dont really know what all this means if I go bankrupt, and my wife buys out my beneficial interest?

Should I get my parents to buy out my Beneficial Interest for a £1 plus fees to ensure that NR dont get their hands on all of the property????

Please can you help before I petition for Bankruptcy?

Many thanks,

[MelanieGiles]

Your beneficial interest is your share of the equity remaining after all charges are taken into account. If your wife buys out your interest, then she is buying the bit you own after the bits that the secured creditors own. I don't think that I can explain this in any better way than I already have. Getting your parents to buy our your share would then mean that they would jointly own the property with your wife, and you could buy back your share after the bankruptcy order if you wish.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[pm.e]

Hi Melanie,

So my parents would be the safer option, just in case NR try to oust the both of us?

Thank you so much for your help on my questions.

[MelanieGiles]

I feel that you now need to take proper legal advice on this issue, as I cannot properly advise on the forum with only seeing a very brief snapshot of your circumstnaces. Try and find a lawyer who specialises in insolvency matters, and who is able to review your case in far better detail than we experts on the forum can.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk