re. house jointly owned with ex, having to sell

[angrywoman]

I am living in the house with our 3 children. My ex partner (separated 2007) is now living with his gf and new baby. She has income so is supporting him. My ex has no income now, not even jobseekers. He has been unemployed since 2010 and as an alcoholic has little chance of work in the near future. He also happens to be 50,000 in debt.
The house has a 177,000 mortgage. It has been valued at 240,000. The interest only mortgage is being paid by IS at the moment as I am not yet working.
My solicitor says I need to sell ASAP in order to get my share of the equity in the house ie. (if the house sells at valued price!) £30,000. She says it is urgent because he is in so much debt he could go bancrupt.
My questions are: would it really be legal for his creditors to force me and the children out and force a quick sale?
I am looking madly for a job because I have been told that I have no chance of a mortgage without one ie. tax credits etc. Even then I could not afford to buy my ex out (£30,000) as I would have to earn at least 40,000. I have just graduated and don't think an arts graduate can earn that after years of museum and gallery and tour guide jobs. I wish! (I want to train to teach next year)
Should I just accept that I can't afford to stay here and get the money out while I can or is there any other alternative?

[sneezecakesmum]

Would a financial advisor be able to help you as well as legal advice?

Obviously you need to establish such basics as joint tenancy, shares in the house, greater financial input by one or other of you.

With bankruptcy they can take all his assets and if half your house constitutes all his assets I think thats very concerning. Would a bankruptcy court make you and the DCs homeless? you really need to get lots of answers with all the facts in front of you.

[Collaborate]

You'd have to sell to buy him out, unless you secure an order under the Children Act (Schedule 1) putting the property in trust until the child grows up. Will take 6 months to get such an order though.

Might as well deal with the trustee in bankruptcy as him, but they'd expect to see a sale.

[angrywoman]

Hmm sounds like my solicitor is right then, not that I doubted really, just wanted to check it out.
He paid most of the mortgage over time because he was by far the main earner when we were together. Though why my caring for our three children wouldn't be taken into account I don't know. I paid half of the deposit on our first home. His mum paid the rest. The profit from that helped us buy this place.
If the property was put in trust for the children (he has paid very little maintenance and pays nothing now) I would still have to pay mortgage (interest only as it stands) and probable remortgage (which I need a job to do).
He is not officially bankrupt yet. Will he be forced into it? I'm really not sure of his present situation entirely, should I ask for evidence?

[Collaborate]

Don't know what you mean by "why my caring for our three children wouldn't be taken into account I don't know. I paid half of the deposit on our first home. His mum paid the rest. The profit from that helped us buy this place".

How do you think it should be taken into account? You still own half the property.

[keli5325]

Hi angrywoman

I am a debt advisor and regulalrly advice on bankrupty. If your ex has debts it is quite rare for credit card and loan companies to make him bankrupt, it is more likely to happen if he owes money to council tax or HMRC. He can of course make himself bankrupt if he wanted to.

If he went bankrupt or a creditor made him bankrupt the property would vest with the trustee in bankruptcy, they would then value the property 2years and 3 months after the bankruptcy order to see if there is any equity at that time. A valuation would be a quick sale valuation and after legal fees which would mean the property value would probably be less than you think and therefore the equity will be less.

The Trustee could expect half of the equity to be released for the benefit of his creditors, this could be done by you or a 3rd party offering the sum of money or by the trustee selling the property, to sell the property they would have to go to court and get an order for sale.

You will be entilted to your share of the equity even if he goes bankrupt.

The other issue is that even if he does go bankrupt, he will still be joint owner of the property and will continue to be on the joint mortgage unless you can afford to remortage or buy out his share of the equity.

I hope this helps?

[angrywoman]

The idea that my ex would possibly get more than 50% as he contributed the most financially over the years? (BB above makes me think this might be an issue). The deposit is a seperate thing I suppose, though not irrelevant.

Thinking about this makes my head hurt!

Six months might be too long, if he is sailing close to the wind.

My ex's debts are (allegedly) £20,000 more than his 50% max. potentially in the house.

Thanks for all your comments / advice, any more appreciated!

[angrywoman]

Thanks Keli!
What does 'vest with the trustee' (him?) mean?
Why 2yrs and 3 months after?

You see, I am going to do teacher training and expect to be better off by then. And particularly if it was undervalued then I could buy him out!

[olgaga]

Surely the solicitor can argue that as you need to house yourself and the 3 children from the marriage with no likelihood of any financial support from him whatsoever, you are at least entitled to a bigger share of the equity, if not all of it?

You also have to allow 2.5% to be deducted from the net equity to meet the costs associated with the sale.

[angrywoman]

Yes I know it's going to cost to sell aswell.

I asked my solicitor that (a larger share or all of equity to me/children) olgaga and I think because we were not married I am less entitled....

[keli5325]

Hi angrywoman.

I didnt mean to add to the confusion, sounds like a stressful time for you x

When someone is bankrupt the trustee will place a restriction over the property to prevent sale or disposal without their permission, so any property will be in the control of the trustee until any equity has been paid (realised) for the creditors. So the mortage would be paid as usual and when the equity is released the trustee would release the restriction and they would have no further interest in it.

Recently the bankruotcy laws changed. previously where there was a property involved and someone went bankrupt, if there was equity the trustee would deal with the equity asap but now they value the property 2yr and 3 months after the bankrupty order. The reason for the change is for situations where a property has no equity, although they might not have equity now they may in 2years time as they hope the value increases in that time and therefore more money for creditors and the insolvency service.

Do not confuse any divorce/seperation proceeding regarding the property and bankruptcy and the property they are 2 seperate issues. so although olgaga is correct that you could argue 3children, no support etc in a family court i am afraid it will hold little weight with the trustee in bankruptcy!

The trustee in bankruptcy will look at the title deeds, place a restriction over the property, then in 2years 3 months after the bankruptcy order value the property using a quick sale valuation ie auction price, taking into account the deposits put down and by whom, less selling/legal fees etc and come to an equity figure for your partners share. This is the amount they will look for to be released of course they will be open to offers from you or a 3rd party

[olgaga]

Ah. Sorry I missed that in your OP. It sounds to me as though the advice you are getting is essentially to get what you can while you can. However, if you had a lump sum like that right now, would it affect your ability to claim benefits you are currently getting?

Keli's advice seems to indicate that you might be able to stay in the house with your children for at least 2yrs 3 months after the bankruptcy, if that actually happened. This would give you time to get on your feet financially, and you would still be entitled to 50% of the equity if the Trustee forces a sale after that period has elapsed.

I'd be inclined to cut and paste Keli's thoughts and email your solicitor with them, with an email questioning whether it might actually suit your circumstances better to stay put.

[keli5325]

Here is an extract from the technical manual from the insolvency service:

If a property is jointly owned - and only one of the joint owners is bankrupt. the bankrupt?s beneficial interest in the property belongs to the bankruptcy estate, which is usually 50% of the equity. The co-owner or a friend/relative can buy the trustee?s interest.


If the trustee?s interest is not bought out, then the trustee will sell the property, but if the bankrupt lives with his/her spouse or civil partner and children, it may be possible to put off the sale for a year. If there is little or no equity, the trustee may take no immediate action and just ?sit on? the property. In this period, the bankrupt is allowed to continue living at the property and pay the mortgage in lieu of paying rent.

If the property is not the sole or principal dwelling house of the bankrupt, the bankrupt's spouse or civil partner or a former spouse or civil partner, the trustee retains his interest in the property even after the bankrupt?s discharge (assuming it has not been bought out by the bankrupt/friend/relative).


If the property is the sole or principal dwelling house of the bankrupt, the bankrupt's spouse or civil partner or a former spouse or civil partner the provisions of The Enterprise Act 2002 apply - see above in ?Bankrupt?s Home Under the Provisions of The Enterprise Act 2002?.


As the trustee only has a beneficial interest in the property, the bankrupt and his co-owner can sell the property at anytime, and the trustee will claim his share of the surplus sale proceeds.

You may also find this useful www.bis.gov.uk/assets/bispartners/insolvency/docs/publication-pdfs/11-1445-what-will-happen-to-my-home.pdf

[angrywoman]

Wow, thanks for that useful information Keli and yes, maybe I will cut and paste to my solicitor.
I will let you know how I get on....

[Collaborate]

olgaga - they're not married, so OP can't get more than 50% just because she needs it. Under certain circumstances she could apply to have use of it until the children grow up - that's my reference to the Children Act application.

[olgaga]

Collaborate - yes, I missed that first time round! Thought it was a bit odd...

[Collaborate]

Sorry - I missed your subsequent correction!

[RedHelenB]

Even on a teachers wage it would be difficult to fund a 177,000 mortgage + pay his half of any equity. I think your solicitor is right, there isn't much choice but to sell as trustee fees etc will eat into any equity if you wait. the most you would probably be allowed to mortgage for would be 100,000 so about half of what you'd need.

[angrywoman]

Redhelen... Yes that has occurred to me. I have a partner, we are both going to do teacher training. Still, its very confusing and a risk I suppose. This is horrible! But if I have to leave this house, I will have to just accept and move on.... (It's quite a nice house with enough room for everyone...) Oh well. What would you do? Hold tight or get rid? I just hate the thought of losing that financial security, the foot on the property ladder etc. On another thread someone suggested I rent it and buy him out out of the income at £500 a month...

[angrywoman]

olgaga, Yes the lump sum would stop benefits, so I am searching franticly for a job....

[Collaborate]

Your ex could try and claim back what he's paid towards the mortgage interest since separation as an occupation rent. This might eat away considerably at the negative equity.

[angrywoman]

He's not paid anything much: at first he took the mortgage off my maintenance then after 4 months it went interest only and I claimed help through income support.

[Collaborate]

OK. Ignore my last post then. Won't apply.

[RedHelenB]

If house values are stable in your area I would be tempted to sit tight as the equity won't lessen BUT be prepared that you may have to look at selling further down the line. If in the next three years you & partner are working you may be able to finance taking over the mortgage. But it obviously is a gamble & I think you need to be prepared to lose the house.

[Collaborate]

I think that the Trustee in Bankruptcy (if it comes to that) would be more likely to do a deal than your ex. If you had a crystal ball you'd know when to time it just right so you buy him out at the bottom of the market.

If he's got court judgments against him, his creditors could apply to the court for a charging order to secure their debt (that's what I'd be doing if advising them), but it's hard for them to get an order for sale.