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JGM, Solicitor
Category: Scots Law
Satisfied Customers: 11277
Experience:  30 years as a practising solicitor.
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Daughter + ex-partner have mortgage of £89.000 on house bought

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Daughter + ex-partner have mortgage of £89.000 on house bought 5 years ago. house now only worth approx £60,000.
Daughter only works 20 hours per week. both she+ex-partner want rid of house ...can't afford to have negative equity of £30,000 between them. She now has a 3 month old baby + new partner is now un-employed
Can she declare herself bankrupt.?
If not,what other options are available to her ?
Thank you for your question.

They can simply ask the lender to repossess the house and give the keys to the lender. The lender will sell the house and pursue them for the shortfall. At that stage she could make herself bankrupt on the basis of the order for payment of the shortfall. Hr entire debts would be discharged after a year. Both of them would have to apply.

The alternative is to keep the house which will hopefully get it value back again in the future.

Happy to discuss further.

I hope this helps. Please leave a positive response so that I am credited for my time.
Customer: replied 3 years ago.

If ex-partner does not wish to pursue this route + declare himself bankrupt and my daughter cannot afford to pay the mortgage ( for 10 months she + new partner have paid the mortgage..(.ex has made no payments as he has a new partner and a rented flat)

.What can she do.....her new partner is recently unemployed .....prospects of new job grim in present climate......she only works 20 hours per week....on maternity leave at present

Can she not give up keys to house and declare herself bankrupt if the mortgage lenders pursue her?

Whole situation is a nightmare !She desperately needs out of current situation........suffers from medically diagnosed depression/mental health problems.

Yes, she can hand the keys back and go down the bankruptcy route if the lender pursues her. I didn't pick up that the house was her and her ex partner as opposed to current partner.

She can hand the keys back and move elsewhere. If the ex partner doesn't do the same then the lender will take steps towards calling up the loan and repossessing via the court.

Happy to discuss further.
Customer: replied 3 years ago.

Sorry about the misunderstanding re ex-partner...thought that I had made it quite clear in the original question.

If my daughter finds alternative accommodation ( perhaps housing Association property or moves in with family or friends) she can just hand back keys to lender explaining that she can no longer afford to pay the mortgage ?

I assume that she should advise ex-partner that she is leaving the property. He lives elsewhere with a new partner.

If he decides to do nothing, and the lender takes steps to re-possess the house through the courts, is it at this juncture that she applies for bankruptcy?

Can she do this even if her ex-partner does not want to declare himself bankrupt?

She is really desperate to get out of her present situation. Thanks

The fault was entirely mine, sorry.

Yes she can tell the lender that she is agreeable to the lender taking back the property. If her ex doesn't agree he can either take on the property and the payments of the mortgage or the lender will simply serve repossession proceedings.

There is no requirement for your daughter to apply for bankruptcy unless and until the lender sues for any shortfall on a sale. The lender may not do so if it realises that your daughter has no assets. After five years the debt would become time barred. She might be lucky in this connection.

Hope this helps. Please leave positive feedback on the system so that I am credited for my time.
JGM and other Scots Law Specialists are ready to help you
Customer: replied 3 years ago.

Thanks... was quite a complicated question that I posed however.answer was very helpful and prompt......Thanks.

Thanks. Don't forget to rate my answer on the system so that I receive credit for my time.