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Dealing with a potential liability

  • Sunshine10
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11 Jun 12 #336136 by Sunshine10
Topic started by Sunshine10
In the middle of trying to sort out finances with the objective of me taking on the FMH. I can just about manage the current mortgage payments. The problem is my husband has a potential tax liability. We won''t know for a year if this liability is real or not (under appeal). He argues that its my liability as well as it was built up during our long marriage. My solicitor doesn''t seem to think so but I can''t help thinking he is right and she is wrong. Irrespective, the fair thing to do in my opinion is share this liability if it becomes real. If we were together and had to pay we would take some equity out of the house. The problem being now I can''t afford to pay more on the mortgage.

We are being amicable at the moment. I''d like to ask if there is anyway he can have a fixed amount (say £100k charge on the property) so that we could remortgage if the liability becomes real. I''ve read about mesher orders and I don''t want that, I want the house to be mine in principal. Does anyone have any advice on how this potential debt could be dealt with in the financial settlement so that if it goes away all well and good, if it doesn''t then an alternative arrangement kicks in? Many thanks.

  • LittleMrMike
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12 Jun 12 #336217 by LittleMrMike
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Whoops, hold your horses here -
For a start, you say you can''t afford to pay any more on the mortgage so, unless I have missed some great truth, you should not be thinking of taking out a larger mortgage, yes no ? I have said this before to people and it bears repetition. Mortgage rates are historically low. You should at least make some allowance to cover the possibility of a rise. Because over the life of a mortgage it is likely to happen.I can recall paying interest on my mortgage at 15% for a very short time.
Secondly, I don''t think you can put a charge of property for a sum which may, or may not, be actually due. If your solicitor is right and it turns out not to be payable, you must at least ensure he does not have the right to a share of your property under any circumstances.
Thirdly, if you take out a mortgage to secure a debt for which he is partly liable, you will, almost certainly be jointly and severally liable to pay for a debt which, in part, was not yours. What if he doesn''t pay his share and you can''t afford the higher mortgage on your own ?
Fourthly, if you are contemplating a deferred sale, and there is a risk of your husband being declared bankrupt which is more than fanciful or theoretical, I will always advise that you consider the risk that the trustee could force a sale to realise his share. . The authority for this is Vivienne Joan Avis v (1) Charles Hamilton Turner (Trustee in Bankruptcy of the property of Edmund Charles Avis) (2) Edmund Charles Avis [2007] EWCA Civ 748.
I''m not sure what to suggest really, but I have really serious reservations for you and I''d ask one question for starters. With all debts there is a time when debts become statute barred and unenforceable. When is this, and is it possible to adopt a policy of wait and see ?
I''m sorry, I don''t want to scare the living day lights out of you, but I don''t like this at all. I would discuss this with your solicitor very very carefully and by all means share what I have said with her if you wish.
LMM

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12 Jun 12 #336229 by Sunshine10
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Thanks LMM. Its really difficult to know how to handle this. My husband wouldn''t be declared bankrupt if we deferred the sale of the house, we have significant equity in it. Thats the issue I suppose. If we sold the house, there would be no problem meeting this liability if it arises. But of course I don''t want to sell the house....

We could wait and see but this appeal has been hanging over us for 8 years already. It may take another two or more to resolve (depending upon who you believe) which means that we can''t reach a financial until it is.

At the moment, money is not an issue, he is supporting us well BUT who knows what will happen in this unknown timeframe and I have no idea how much he is spending himself (and therefore no idea how much can be put away for this potential liability)..

  • hasski
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24 Sep 12 #357575 by hasski
Reply from hasski
I note that you are negotiating amicably. This is sadly too rare and should be encouraged.

I have an acquaintance who likewise has a potential liability and his spouse refuses outright to share or even discuss the sharing of this liability. It is very disappointing that the position is "if we were married we''d have no choice but to share liability, but not in divorce".

He is the non-resident parent and as such kept a much smaller portion of the assets as is generally the case. It is dimly received by the court if the former refuses to share liabilities while enjoying the assets

My advice is to to take a risk-adjusted view of this liability becoming due and to enter it into the mutual assets (to adjust their total value down) before division. If it means you can''t keep the FMH, maybe this is the time to consider moving to smaller accommodation.

Remember, you are equally liable to this debt and must make provisions irrespective of your ex-husband

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