Hi! Help!... Does anyone know if my partner will be FORCED to go bankrupt? Im starting to think in the case of Neg equity, its not in the mortgage companies interest to do so??... The situation is: The property has been abandoned by one partner (divorce is complete). The mortgage company will come after the other partner (who is contactable) & already in alot of (manageable) debt. The property is in negative equity, i.e the sale or value, will come nowhere near covering the mortgage outstanding & the loan secured on it. So the partner will be passed this additional debt & in no way can pay for it. Therefore, WILL the MORTGAGE COMPANY seek TO BANKRUPT the partner???? THANKS! :)
the short answer is eventually yes although it depends what, if anything, has been arranged in respect of the deeds and mortgage under the terms of the divorce.
If you have been legally removed from both then she is already solely liable. If you have not then you may both still be liable and therefore both facing bankruptcy in the event of a shortfall on sale price against outstanding mortgage.
You're right that it would seem the mortgage lender gains nothing from petitioning for bankruptcy but you should also remember they have shareholders to report to and cannot shrug their shoulders and accept the situation. They must be seen to be using the law to it's fullest extent. More importantly, they cannot claim from any insurance they may have to cover this kind of shortfall unless they have tried everything possible to recover the funds.
Will my partner be forced to go bankrupt?
Posted - 16 January 2009 : 13:01:26
