Twitching & Birdwatching1 min ago
Mortgage and loan arrears
2 Answers
Hi, Does anyone have any useful suggestions when a couple have separated and they have a joint mortgage and a joint loan. One person has stopped contributing and both mortgage and loan have gone into arrears. Is there any way of splitting the debts so that the other person who is continuing to pay can just be responsible for half the debts.
Answers
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I'm sorry that this doesn't meet with your requirement for a 'useful suggestion' but it does explain the contractual situation:
If two people take on a joint loan (whether those loans be in the form of a mortgage or anything else) there is 'joint and several' liability to pay. That means that, if the loan is in arrears, the lender is at liberty to pursue either or both of the people to get their money. For example if 'A' continued to live in a mortgaged property, but clearly had no money to repay the debt, the lender has every right to demand payment from 'B' (even though 'B' no longer has anything to do with the property).
The only way that the debts could be split equally between 'A' and 'B' would be if:
(i) both 'A' and 'B' were both prepared to sign up to such an arrangement ;
AND (more importantly)
(ii) the lenders were prepared to accept such an arrangement.
Given that any lender would always be happier to know that there are TWO separate people who can be pursued for repayment of the WHOLE of a debt, the chances of that seconds condition being met are effectively nil. (i.e. no lender is going to amend an existing contract, whereby the person who is still paying up can be forced to repay the whole debt, in favour of one where that person is only liable for half the debt. Any lender who did so would actually be acting illegally, since such an action would be against the interests of the company's shareholders).
Chris
If two people take on a joint loan (whether those loans be in the form of a mortgage or anything else) there is 'joint and several' liability to pay. That means that, if the loan is in arrears, the lender is at liberty to pursue either or both of the people to get their money. For example if 'A' continued to live in a mortgaged property, but clearly had no money to repay the debt, the lender has every right to demand payment from 'B' (even though 'B' no longer has anything to do with the property).
The only way that the debts could be split equally between 'A' and 'B' would be if:
(i) both 'A' and 'B' were both prepared to sign up to such an arrangement ;
AND (more importantly)
(ii) the lenders were prepared to accept such an arrangement.
Given that any lender would always be happier to know that there are TWO separate people who can be pursued for repayment of the WHOLE of a debt, the chances of that seconds condition being met are effectively nil. (i.e. no lender is going to amend an existing contract, whereby the person who is still paying up can be forced to repay the whole debt, in favour of one where that person is only liable for half the debt. Any lender who did so would actually be acting illegally, since such an action would be against the interests of the company's shareholders).
Chris
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