Property Query

[Minnie]

Some of you will be aware my hubby is at the beginning of an IVA process. You will also be aware from previous postings that the property we live in is mine. Hubby does not financially contribute to it; I pay mortgage etc., etc; have paid for all home improvements thereby increasing property value considerably.

That said, following a meeting we had with his IP last week it was made clear to me that if hubby opted for the bankruptcy route the Official Receiver would deem hubby has a claim on the property despite any protest from either me or hubby, who has always maintained he has no claim. With this in mind my understanding is that the OR could make me remortgage or try to realise what the OR would see as a claim hubby would have against the property in order to provide a full and final settlement or contribution towards hubby's debts.

The OR would see that I have benefited from hubby's debts yet on here it is clear from the experts' views that a spouse is not responsible for the other person's debts. Seems a little contradictory but I acknowledge the OR will use any means necessary to realise some funds to pay back creditors.

My query is what happens in the case of an IVA - obviously it would be reported to creditors that hubby has no property but could they try to include an equity clause based on a similar rationale an OR would adopt?

Under no circumstances can I risk the house and as I too have a high level of debt (that is managed) would find it difficult to raise any equity as it is, short of selling the property, which would be the final straw and given the pressures our marriage is already under, I am not sure we would survive that.

[MelanieGiles]

Minnie

You were advised that a subsequent Trustee MAY lay claim to your property, but that this was not definate. As I explained to you both, the Trustee does not have any power to make you re-mortgage, the Court will determine whether your husband has any interest in the property and if so, will award in the Trustee's favour. If this occurs, you will be invited to purchase that interest, and if you choose to use a re-mortgage then that is for you to decide. No-one can determine this for you.

With regard to responsibility for each others debts - you were not advised that you were responsible for his debts, but that this is a perception that creditors currently have. Other experts on here, perhaps who are not so involved with proposing clients IVA proposals, may not be so au fait with current market requirements - I am and can assure you from experience that your husband's creditors will share this view. Whether this is right or wrong is irrelevant - they hold the power to say yes or no at the end of the day.

In an IVA, it is unlikely that creditors will put forward an equity release clause - given that your husband does not legally own the home you both live in, however they may well reject his arrangement on the basis that they feel that best foot is not being put forward.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Minnie]

Thank you Melanie.

My understanding was that given how OR's will adopt what means necessary to satisfy creditors that I would be forced into a corner to realise what they saw as hubby's claim on the property. I didn't feel from the conversation that I would have a choice.

When talking about responsibility for debts I was going more on the comments I have read on here in that I am not responsible for his debts as he is not responsible for mine. However, when talking about an IVA and creditors taking a view that I had benefited from his borrowing, this in a way makes me feel responsible.

What do you mean "on the basis that they feel that best foot is not being put forward"?

[MelanieGiles]

Trustee's in bankruptcy will take a view as to whether they feel they have an interest in a property, gained by couples living together and sharing household commitments and expenditure. This is a most usual practice with most married couples, I appreciate that this is not how you run your finances, which have always been kept separate from each other.

I feel that you must now take proper professional advice as to your situation before proceeding further. You should not rely upon advice provided by posters on a debt forum - and I accept that this is a very good one - about something as important as the future of the family home. I have advised your husband to the best of my ability, but it is clear that there are matters you wish to find further clarifiation. And this can only be provided by a lawyer with specialist knowledge of personal insolvency matters.

My latter comment I feel is self-explanatory. Creditors may feel that your husband has developed an interest in the property, and is choosing to ignore this. Again - we are talking about perception rather than cold fact, but they are the ones who have the power to say yes or no.

If you do get a lawyer's opinion in writing, your husband's IP can use this to support his IVA being based upon him having no interest in the property. This could well strengthen the case in his, and ultimately your, favour.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Minnie]

I am seeking legal advice as far as I can but as I am sure you will appreciate formal legal advice does cost. Whilst I appreciate this may give me the assurance I need and in that case would be a small price to pay, given your experience at dealing with over 1000 IVAs I think you are in a good position to advise from your dealings with creditors and how they would view our position.

All I need to be assured of is that with hubby's IVA there will not be an equity release clause built in somewhere.

I do appreciate and thank you for your time Melanie. I am confident we can make this IVA work.

[MelanieGiles]

Minnie

We will not know this until the day of the creditors meeting, but of course if this is put forward then you will not accept it in any case, so there will be no forcing of this provision upon you. You and your hubby are in control of these proceedings, and have the ultimate yes or no as it is you who has to honour the agreement at the end of the day.

I have as much time as you need to be able to make your decision, and never feel afraid to ask questions. This is a difficult decision for you to make, and I fully appreciate your commitment. I have no hesitation that you will not make a five year contributions based arrangement work, as I know how much this means to you both.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Minnie]

Thank you Melanie - your reply means a lot to me.