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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4550
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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Hello Hopefully someone can give me some advice with regards

Customer Question

Hopefully someone can give me some advice with regards XXXXX XXXXX debt.

About 5 years ago I went through a very messy divorce which left me not only with a lot of debt but at the same time my ex-wife burnt my house down (which was not insured as she had cancelled the insurance) so was left owing for a mortgage with no assets.

I eventually managed to get the mortgage company to repossess the property leaving an outstanding balance of £247,000 which I owed.

On top of this I owed about £45,000 on a mixture a loans and credit cards which funded the divorce.

Due to the circumstances (right or wrong) I decided in the main I was not willing to pay any of this debt and I also decided at the time I did not want to go bankrupt as I have a good job and I felt it would not aid the situation.

So what am I currently doing:

Mortgage - seems to be administered by another company now, not Halifax and I have queried if Halifax have actually sold the debt off by they say not however my credit file is marked as Satisfied on this debt. I am currently repaying this at £250 per month so this will take about 90 years to clear !! They have offered to settle for about £100k to which I can not afford.

Other Debts (about 5 lenders) - one of them I am paying back a nominal amount of £10 a month but all others I have ignored and other than various letters chasing they have not really pushed hard for it. I do know at least 2 or 3 of these debts have subsequently been sold on by the original lender to a new company.

FYi the original defaults on my credit file are all around about 2011 albeit I stopped paying most of them in 2009.

So my questions:

- Am I right in thinking going bankrupt is not the best option still (especially given I am currently setting up my own business)

- Does the fact the mortgage debt is marked as satisfied on my file would I get away with now not paying it anyway ?

- With the other debts I presume if I can avoid them for 6 years then by default it all goes away.

- What are the suggestions (other than paying !!) to make it go away, ingenious solutions would be appreciated.

PS the only reason I am not really prepared to pay it is because of how they were generated (out of my control) and the fact that my ex-wife got all the cash assets (of about £40k) and left me with nothing. And I would never want to pursue her for anything as it is not a good relationship.

Looking forward to your responses.

Submitted: 4 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 4 years ago.
Dear Friend,

Hello and welcome. Thank you for using Just Answer. I am sorry to hear about your situaton.

I have been going through your quesitons and what I feel that you are trying get away with the debt without harmng any of your future prospects. Let me try and throw some light on these issues.

Let me begin by second point first, Even if the mortgage is marked by satisfied on your credit, you may not do away with that. Being marked as satisfied may be because of the incorrect reporting. Oncey you stop paying and if your account is in default, it may get reported correctly again.

Secondly, you have correctly presumed the limitation periods. Under the Limitations Act 1980 the time limits are
==>in simple contracts, 6 years
==>in contracts under seal, 12 years.

If the debtor acknowledges the debt in writing or makes a part payment within the original limitation period, then the time limits start to run again from the date of acknowledgement or the date of payment. So, do not make any partial payments and if you avoid them / or manage to keep them away for 6 years, you can get away with them.

Let me now come to the first point / question. You are correct per se that bankruptcy should be avoided especially when you are setting up new business and one of the disadvantages would be that if you own a business, it is more than likely that the Official Receiver will close down your business, dismiss your employees and sell off the assets

HOWEVER, what if you corporatize your business. If you make a limited company first, separate it from yourself then the bankruptcy will NOT affect your business / or at least it will have minimal effect. You should consult a local attorney there and explore this option.

This is because, you may be able to evade the lenders other than mortgage for 6 years but if you stop paying mortgage, they may come after you in all possibilities. Under such case, bankruptcy can be the only way out. There are only two options to clear the debt. To pay up OR keep evading it. I am sorry, but no third option exist other than the bankruptcy.

So, consider taking advice of an attorney, try and separate your business from yourself by corporatizing it and see you can explore bankruptcy option.

I am sure this would help...

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Warm Regards...