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Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 33946
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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My niece's husband went bankrupt in April 2014 and the

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Good Morning,
My niece's husband went bankrupt in April 2014 and the trustee took out a charge on his equity in the house lasting till April 2017.
They were divorced - Absolute 21st July 2016
She has received a letter from The Insolvency Service giving her till 22nd Aug to pay the estimated 50% equity due to it or otherwise resolve the debt. It would then be passed to an IP to resolve.
She does not know how much the bankruptcy order was for but he told me it was £19k
Questions.
1. According to the notes supplied - If we find the money to buy the 50% TIB's share of the equity the house will belong to her. He will, however, still be legal joint owner of the property but she will receive all the equity in the property.
So, Would we need to inform the building society or is it status quo as far as they are concerned?
2. Also, There is a charge on the house from NatWest for £17k. The repayments have not been kept up to date and there is a 6 month review on the current arrangement of £4 per month that was accepted recently. ( They are not receiving anything from him as far as we know. )
If we paid the TIB off would that mean changes in ownership at the land registry, which would result in the NatWest demanding their outstanding balance?
Obviously we would not want to pay off the TIB to find that she had to sell anyway as the building society would not allow the mortgage to stay in place and she was not offered a mortgage and/or that NatWest wanted the £17k repaid in full at that point.
Her circumstances:-
The mortgage payments are up to date
She works part-time and has a 7 yr old son who lives with her.
She is on WTC
He is not paying her any money for their son, although he agreed to do so.
She has a budget that she is working to and has been able to reduce the other debts he left her with on credit and store cards.
The bankruptcy –
He has been in salaried occupation since Nov 14. Should he have told the Trustee in Bankruptcy (TIB)? If so, Will he have been making payments to reduce the debt?
Your advice will be much appreciated.
Submitted: 9 months ago.
Category: Law
Expert:  Clare replied 9 months ago.

Thank you for your question

My name is Clare

I shall do my best to help you but I need some further information first.

How much is the house worth and how much is outstanding on the mortgage?

Customer: replied 9 months ago.
Morning Clare,
Sorry for the delay in responding. I needed to get the information needed.
The outstanding mortgage is £116627. and the sale price is £159,950 expecting to realise £150,000.
I spoke to the Insolvency Service in the meantime and will reply to the letter sending the requested valuation and my niece's offer to buy the Official Receiver’s (O.R’s.) interest. UNLESS YOU ADVISE OTHERWISE?
As an accountant I can see how the illustration arrives at the amount they would require. The above valuation would result in a reduction of that amount.Her buying out the O.R’s. would result in her owning 100% of the equity – as advised by the O.R. (Tenants in Common). BUT He is still Joint Owner.
Our concerns now are:-
1. The Building Society . Would they call in the loan? The mortgage is up to date and she has been on her own since Dec 15.
2. NatWest. Have a charge on the property for their loan of £ 17324.01. Would they require payment of that amount in full now? (There is some doubt as to whether they should have lent them the £25k in the first place. Is it possible to get a loan written off if that was the case? Loan taken out when they bought the house to bring it up to standard in 2006).
If NatWest not to be paid now, in what circumstances would they have to be paid?
I have a financial adviser who arranged the original purchase for them, he will act in finding a new mortgage for her on her own. Assuming that is possible, would NatWest require to be repaid in full immediately or would the loan continue? As her income doesn’t allow for full monthly repayment she has a 6 monthly arrangement presently at £4. per month.
3. He has said he has no interest in the house and would sign it over to her. How would we do this?
I know there is a lot of information here and I hope that I have laid it out in a way that is both clear and relevant.
Best regards,
Charis
Expert:  Clare replied 9 months ago.

Is the Nat West loan paid up to date?

Customer: replied 9 months ago.
Hi Clare,We really need to get to the bottom of this, so please advise when we may expect your solution.re NatWest - No, it is not, see below.I have reviewed my previous information and tried to cover such questions, so, please see below.12 8 16My niece's husband went bankrupt in April 2014 and the trustee took out a charge on his equity in the house lasting till April 2017.
They are divorced - Absolute 21st July 2016
She has received a letter from The Insolvency Service giving her till 22nd Aug to pay the estimated 50% equity due to it or otherwise resolve the debt. It would then be passed to an IP to resolve.
I spoke to the Insolvency Service and have replied to the letter sending the requested valuation (which is lower than their estimate ). The outstanding mortgage is £116k. with a NatWest loan of £17k and the sale price is £159,950 expecting to realise £150,000. As an accountant I can see how their illustration arrives at the amount they would require so accept the logic of that.Questions.
1. According to the notes supplied and the Insolvency Service- If we find the money to buy the 50% TIB's share of the equity the house will belong to her. He, however, will still be legal joint owner of the property but she will receive all the equity in the property.
So, Would we need to inform the building society or is it status quo as far as they are concerned?
Would they call in the loan? The mortgage is up to date and she has been on her own since Dec 15.2. Also, There is a charge on the house from NatWest for £17k. The repayments have not been kept up to date and there is a 6 month review on the current arrangement of £4 per month that was accepted recently. ( They are not receiving anything from him as far as we know. )If we paid the TIB off would that mean changes in ownership at the land registry, which would result in the NatWest demanding their full outstanding balance?Obviously we would not want to pay off the TIB to find that she had to sell anyway as the building society would not allow the mortgage to stay in place and she was not offered a mortgage and/or that NatWest wanted the £17k repaid in full at that point.There is some doubt as to whether NatWest should have lent them the £25k in the first place. Is it possible to get a loan written off if that was the case? The loan was taken out when they bought the house to bring it up to standard in 2006.3. He has said he has no interest in the house and would sign it over to her. How would we do this?Her circumstances:-
The mortgage payments are up to date
She works part-time and has a 7 yr old son who lives with her.
She is on WTC
He is not paying her any money for their son, although he agreed to do so.
She has a budget that she is working to and has been able to reduce the other debts he left her with on credit and store cards.I know there is a lot of information here and I hope that I have laid it out in a way that is both clear and relevant.Your advice will be much appreciated.Best regards,
Charis
Expert:  Clare replied 9 months ago.

It is in fact possible to negotiate with the Trustee if you believe that the property is over prices.

When calculating the 50%, discount should be given for the costs of sale and court costs in forcing the sale when calculating the amount due.

1. This is not an unusual situation and the Mortgage will simply continue - it will not be called in

2. Your neice will have to negotiate with the Nat West - and no they will not writ the loan off given the equity in the property. However she will then be liable for the full debt and must budget accordingly

3. Your niece should obtain a Financial Order within the divorce proceedings confirming that the Matrimonial Home belongs to your niece alone and dismissing any claims they have against each other

I hope that this is of assistance - please ask if you need further details

Customer: replied 9 months ago.
Thank you for that, Clare. I was aware of the possibility of negotiating and we are awaiting the response having sent the valuation.re 3. This is the real issue. At the point of the divorce the solicitor advised that the equity was not his to dispose of so there was no order of any kind made at that point. In the light of the information I provided, please advise what she should do now.Many thanks,
Charis
Expert:  Clare replied 9 months ago.

At the time the solicitor was correct - but now your Niece needs to ensure that her ex can make no further claim on her

Customer: replied 9 months ago.
Okay. So what should she do, please. Step by step for a lay person!!Thanks,
Charis
Customer: replied 9 months ago.
Surely it cannot be "within the divorce proceedings"?
Expert:  Clare replied 9 months ago.

In fact it is - assuming she has not remarried.

She will need to have a Consent Order drawn up dismissing all claims they have against each other.

She and her ex will have to sign this - and sign Statements of Information for a Consent order - and send them to the court with a £95 fee.

Customer: replied 9 months ago.
Thank you for that, Clare. Sorry I did not reply last night. Fell asleep in front of the Olympics!
Will talk to my niece and see how she wants to proceed. Would you advise on this too?Many thanks,
Charis
Expert:  Clare replied 9 months ago.

I gave up in the third set1

You can always ask follow ups - or ask for me if you start a new question!

Clare, Solicitor
Category: Law
Satisfied Customers: 33946
Experience: I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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