Mortgage Shortfall Debt

A question about : Mortgage Shortfall Debt

Hi All,

Bought a house with my ex-wife back in 2002, house was voluntarily repossessed in 2012 following breakdown of marriage - we were unable to sell it, house was vacant for some time and suffered damage.

Not heard anything from Halifax since they managed to sell it in 2012, until a letter came through the door the other day saying they are now chasing the mortgage shortfall debt of Ј43k.

I am not in contact with my ex-wife, there is no point as I know she is not interested.

My current situation is that I live in rented accomodation with my new wife, do not have any savings or valuables, don't own any property other than my Volvo car (worth about Ј5k). We are currently on a DMP, mostly as a result of the debt I inherited from my previous marriage.

My ex-wife as far as I can tell went for a Protected Trust Deed, although the mortgage shortfall hadn't surfaced at the time she started this, so not sure how this would affect her now? Would the Trust Deed cover this (I'm thinking not as the mortgage debt probably wasn't presented at the time she set it up).

After a few days of mulling it over, my options are either :

(1) Offer them Ј2k in full and final settlement. This is the maximum amount I can scrape together from family and friends.
(2) Go bankrupt.

As stated above, I have no assets or equity. So am I right in thinking it is unlikely they would petition for me to be made bankrupt? They would have to pay the bankruptcy fee, and no assets would be released, so what would be the point?

My starting position is option (1) above, but how much proof will I need to give them of my current financial position? Will they ask to see bank statements, DMP statements, wage slips, etc.? Are they even entitled to see this information, or can I be forced to divulge it? Not that I have anything to hide, I just want to be sure how much access I need to give them.

However, option (2) would have the benefit of ending the DMP as well but obviously with the repercussions of bankruptcy (my new wife and i would like to get another mortgage at some point in the future once our credit ratings are repaired).

My first action is to ask them for the breakdown of the final figure they are looking for and confirmation they sold the property for a reasonable price (according to Zoopla, it went for Ј80k despite the last estimate from our estate agent being Ј120k).

Any advice/thoughts would be welcome.

Thanks,
Chef

Best answers:

• Page 5 onwards of the NDL factsheet here goes through possible options.
  https://www.nationaldebtline.org/EW/...shortfalls.pdf
  Bankruptcy is the final option, but as you say so is a settlement. And other things to look into that the factsheet goes though.
• Hi Folks,
  Thanks for the replies so far.
  The nature of my job (early starts and late finishes) means that having a reliable car is essential as me being at work at a certain time is vital from my employer's point of view. We live in middle of nowhere so public transport just isn't an option. I have a round trip of just under 70 miles per day to get to/from work, so an old banger isn't something I could rely on.
  What would happen if I was to transfer the vehicle V5 into my wife's name? She would then technically own the car and I could say that it can't be touched as it is not mine to sell?
• So how do I go about transferring ownership?
  Create an invoice to show I sold it to her at a nominal price of Ј1?
• On the assumption you are considering Bankruptcy, such a transfer of ownership for a sum obviously less than market value, would be identified and reversed by the Official Receiver.
  See the stickies at the top of this forum, for information about assets, and what the OR can do
• Hi,
  You should avoid doing anything with the car. It is your asset and will remain so no matter what you do.
  If the car is worth Ј5k then the vehicle would be sold and money for a reasonable replacement given to you in the region of Ј1k - Ј2k. This is assuming that you can prove a NEED for a car - and it seems that you can.
  DD
• Hi everyone, thanks for your replies so far, it seems there is nothing I can do about the car.
  On a related note, I paid for the car via a car loan through my employer. This is an interest-free loan which my employer provides as a benefit, and I pay it back through my salary every 4 weeks.
  If I was to go bankrupt, how would this debt be treated? Would it be the same as a credit card or loan for example? What would be the consequences to my employment of defaulting on this debt? Or would it be left alone as it is paid 'at source'?
  My company is pretty understanding, but I'm worrying about potentially biting the hand that feeds me!
• All debts are treated exactly the same by the OR whether its a credit card company or a loan from your Nan... It might be worth talking to your employer about this. If you sold your vehicle now for its real value, would that be enough to pay off the loan?
  If its any consolation, my 'old banger' has so far, proved to be the most reliable car I ever had and has cost me next to nothing to run. If you do chose the BR route you may as well get looking for a replacement now - I found a car with cosmetic damage (torn back seat ,missing parcel shelf and large scratch on one of the doors) but a very good engine and it meant I had a car that should have been worth Ј3-4K was realistically valued at Ј1K