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Does giving up my home equity mean I should pay less child maintenance in the future?
#1
Hello, 

I was wondering if any of you might have some advice/suggestions regarding my situation. Any help would me much appreciated. 

I'm going through a divorce and I have a son who's 8 and who lives with his mother. He stays with me about 100-120 nights/year. 

A few years ago my wife and I bought a flat through a shared ownership scheme. We own 60% of the flat. We paid the mortgage together up to 2014 when we separated and I moved out. So theoretically I have some equity in the flat based on all the payments we jointly made up to that point. After I moved out, she paid the mortgage by herself. She was making much more money than me anyway. However, the child maintenance I've been paying her since I moved out has been nearly two times more than I should have. 

At some point in the past, I told her that I'd be willing to let her keep the flat because, after all, my son lives there. If I give up my share of the flat, would that be considered as a lump sum of money that I'd be giving her and I'd have to pay less child maintenance in the coming years? At the moment we calculate child maintenance using this: https://www.gov.uk/calculate-your-child-maintenance, but apart from that I also pay for my son's extra activities (swimming, tennis). Also, if I take my son on a 2-week holiday during the summer, does that mean that I have to pay her the full child maintenance for that month even if my son is away with me for half of that time?

Another thing worth mentioning is that while we lived together we never had a joint account or a joint credit card. We managed to accumulate a massive debt on the credit cards. We paid off her credit cards, but we never managed to pay off mine. With the ridiculously high-interest rates, the debt soon became a considerable figure - tens of thousands of pounds. I was lucky enough to find out about a charity that helped people in my situation. They contacted all the credit card lenders and managed to freeze the interest rates. They put me on a Debt Management Plan and I will have to make payments for the next 10-15 years. Not to mention that my credit score is completely messed up. I don't know if anyone will ever give me a mortgage again. Since all the credit cards happen to be on my name, of course my wife does not care at all about the massive debt. However, theoretically and morally, half of that debt is hers. We spent the money together. Her share of that debt is probably as much as my equity in the flat. 

I really can't afford a costly divorce. I filed for divorce based on the ground that we've been separated for more than 2 years. I thought the procedure would be quite simple, but apparently, it is quite simple only if you've agreed about all the financial matters beforehand. I want to avoid having to pay ridiculous fees for solicitors and keep it as amicable as possible. 

What would you do in my situation? Any organisations that could help me? 

Thank you for your time. I look forward to hearing you thoughts/experience.
Reply
#2
(07-05-2016, 10:52 AM)williamc Wrote: Hello, 

I was wondering if any of you might have some advice/suggestions regarding my situation. Any help would me much appreciated. 

I'm going through a divorce and I have a son who's 8 and who lives with his mother. He stays with me about 100-120 nights/year. 

A few years ago my wife and I bought a flat through a shared ownership scheme. We own 60% of the flat. We paid the mortgage together up to 2014 when we separated and I moved out. So theoretically I have some equity in the flat based on all the payments we jointly made up to that point. After I moved out, she paid the mortgage by herself. She was making much more money than me anyway. However, the child maintenance I've been paying her since I moved out has been nearly two times more than I should have. 

At some point in the past, I told her that I'd be willing to let her keep the flat because, after all, my son lives there. If I give up my share of the flat, would that be considered as a lump sum of money that I'd be giving her and I'd have to pay less child maintenance in the coming years? At the moment we calculate child maintenance using this: https://www.gov.uk/calculate-your-child-maintenance, but apart from that I also pay for my son's extra activities (swimming, tennis). Also, if I take my son on a 2-week holiday during the summer, does that mean that I have to pay her the full child maintenance for that month even if my son is away with me for half of that time?

Another thing worth mentioning is that while we lived together we never had a joint account or a joint credit card. We managed to accumulate a massive debt on the credit cards. We paid off her credit cards, but we never managed to pay off mine. With the ridiculously high-interest rates, the debt soon became a considerable figure - tens of thousands of pounds. I was lucky enough to find out about a charity that helped people in my situation. They contacted all the credit card lenders and managed to freeze the interest rates. They put me on a Debt Management Plan and I will have to make payments for the next 10-15 years. Not to mention that my credit score is completely messed up. I don't know if anyone will ever give me a mortgage again. Since all the credit cards happen to be on my name, of course my wife does not care at all about the massive debt. However, theoretically and morally, half of that debt is hers. We spent the money together. Her share of that debt is probably as much as my equity in the flat. 

I really can't afford a costly divorce. I filed for divorce based on the ground that we've been separated for more than 2 years. I thought the procedure would be quite simple, but apparently, it is quite simple only if you've agreed about all the financial matters beforehand. I want to avoid having to pay ridiculous fees for solicitors and keep it as amicable as possible. 

What would you do in my situation? Any organisations that could help me? 

Thank you for your time. I look forward to hearing you thoughts/experience.
Regarding contact, you need to get the arrangements done in a Formal way you can prove. In a typical contact situation, you would have up to half the school holidays (if you asked for that much you would get it), and in shared care the same. If you have 104 nights, the reduction is more than 103 nights per year.

Assumptions are made that up to moving out you paid half each on the mortgage. If your ex is keeping the place on, it might be better if she raised her own mortgage if she can, and either enough to buy you out, or you put a charge on the house for your share (so you get your money when its sold).

While its in both names, your both liable for keeping to the terms of the contract.  You might be able to offset some child support if your making payments on a joint mortgage, but in doing so your ex would get the credit for the payment being made.

Any money coming to you due to the house is nothing to do with Child Support payments. The law of the country says you have to financially support the child, and the enforcing authority is CMS if parents can not agree things, with them backed up if none payment by bailiff, attachment of earnings or enforcement via county court.

The principle is that the Resident Parent (who gets Child Benefit) can access the benefits system, to ensure that have what the law says they need to support their household. Therefore the normal day to day costs of the child is down to them.

Child Support is not considered as income for means tested benefits, so puts the Resident Parent in a better position by what is considered to be a fair amount the other parent should be paying, towards normal day to day things. It considers ability to pay, and how much staying contact, as that parent is providing everything during that time.

Its normal for people to pay for extra things where its by agreement, but the law would never force you to pay more than the CMS calculator. The amount is paid all year round, in the same way the Resident Parent gets the same benefit amount all year round (unless they have changes to report).

For you to get anything from your ex with regard to credit card debt in your name, you could have to prove to a count that the money was used for the family, and that there was a contract/agreement by her at the time, to help repay this.

You might be better in a IVA than a debt plan, as an IVA works out what you can afford to pay for 5 years, and then anything else is wrote off.
Posts made by me are my opinion and any factual information should be checked out. If you do not have a Solicitor, often your local CAB can get you some initial advice.
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#3
Thank you for your quick reply.

The charity told me that if I were to go for an IVA, I would have to say bye bye forever to a future mortgage. However, with a Debt Management Plan I might still be able to get a mortgage if I'm lucky. It would be a much higher interest rate indeed, but still better than renting your whole life and paying your landlord's mortgage. That's the only reason why I decided to stick to the Debt Management Plan.

Regarding the credit cards debt, it would be very difficult to prove in court that the money was used for the family and that there was a contract/ agreement by her at the time to help repay the sum. We verbally agreed that we'd pay everything together. I've lost hope on this front, so I'll just have to pay off the whole thing by myself.

My knowledge in terms of law is very limited, so could you please tell me what exactly means 'to put a charge on the house' for my share? How does that affect her ability to remortgage and buy the remaining 40% from the housing association? She is very anxious to get my share of the flat as soon as possible because she wants to remortgage and buy that remaining 40%. Also how would that 'charge on the house' affect my ability to get a mortgage in the future? Does it mean that I would still be legally responsible for the remaining mortgage or would the whole remaining balance be transferred to her name?

To be honest, when I told her I'd be giving her my share in the flat, I was mainly thinking about my son. I thought that after all, he would be living in the flat and one day the flat would be his anyway. Now she's moving in with her new partner and I'm happy for her. However, should they have children, my share of the house would be split at some point between my son and her other children. Furthermore, if I give her my share of the house, I do it based on the fact that she'd have full custody of our son (but I'd still have him 100-120 nights/year). What happens if a couple of years along the line, our son wants to live with me and my new partner? We would both love to have him and nothing would make us happier. However, it would then be unfair for my ex to have been 'gifted' my share of the flat. In such a scenario, the amount of child maintenance she'd be paying us would barely cover the cost of an extra bedroom in London. I want to be fair to my ex but I want to be fair to my new partner too. She shouldn't have to suffer because me and my ex were such a disaster when it came to keeping our financial affairs in order.

On the divorce front, when we get a hearing from the judge, does it mean we have to show up there with a legal agreement drafted by a solicitor regarding child maintenance, school holidays, visits, mortgage etc.? Or can we draft that paper ourselves and just present it to the judge?

Thanks a lot for reading this. Any advice/suggestions would be greatly appreciated.
Reply
#4
(07-05-2016, 04:43 PM)williamc Wrote: Thank you for your quick reply.

The charity told me that if I were to go for an IVA, I would have to say bye bye forever to a future mortgage. However, with a Debt Management Plan I might still be able to get a mortgage if I'm lucky. It would be a much higher interest rate indeed, but still better than renting your whole life and paying your landlord's mortgage. That's the only reason why I decided to stick to the Debt Management Plan.

Regarding the credit cards debt, it would be very difficult to prove in court that the money was used for the family and that there was a contract/ agreement by her at the time to help repay the sum. We verbally agreed that we'd pay everything together. I've lost hope on this front, so I'll just have to pay off the whole thing by myself.

My knowledge in terms of law is very limited, so could you please tell me what exactly means 'to put a charge on the house' for my share? How does that affect her ability to remortgage and buy the remaining 40% from the housing association? She is very anxious to get my share of the flat as soon as possible because she wants to remortgage and buy that remaining 40%. Also how would that 'charge on the house' affect my ability to get a mortgage in the future? Does it mean that I would still be legally responsible for the remaining mortgage or would the whole remaining balance be transferred to her name?

To be honest, when I told her I'd be giving her my share in the flat, I was mainly thinking about my son. I thought that after all, he would be living in the flat and one day the flat would be his anyway. Now she's moving in with her new partner and I'm happy for her. However, should they have children, my share of the house would be split at some point between my son and her other children. Furthermore, if I give her my share of the house, I do it based on the fact that she'd have full custody of our son (but I'd still have him 100-120 nights/year). What happens if a couple of years along the line, our son wants to live with me and my new partner? We would both love to have him and nothing would make us happier. However, it would then be unfair for my ex to have been 'gifted' my share of the flat. In such a scenario, the amount of child maintenance she'd be paying us would barely cover the cost of an extra bedroom in London. I want to be fair to my ex but I want to be fair to my new partner too. She shouldn't have to suffer because me and my ex were such a disaster when it came to keeping our financial affairs in order.

On the divorce front, when we get a hearing from the judge, does it mean we have to show up there with a legal agreement drafted by a solicitor regarding child maintenance, school holidays, visits, mortgage etc.? Or can we draft that paper ourselves and just present it to the judge?

Thanks a lot for reading this. Any advice/suggestions would be greatly appreciated.

I used to have my own agency for a Home Collected Loan Company so I know the law on this, and if need be I an point you to where you can confirm it.
When you apply for any form of Credit (Loan/Mortgage, Credit Card) they use a Credit Reference Agency.  Company's you have agreements with will be updating them agency's with your payment history, in terms of is it paid, late or in default. Payments made only stay on credit file for 6 years (as per the law). Therefore after 6 years, there is no reason why you would not get a mortgage (or any other form of credit), subject to being able to afford it, and no credit payments in default.

Therefore and IVA would report for 5 years that reduced payments was being made, but in year 6, all your debts would show as being settled (as in an IVA they are wrote off). On a Debt plan your going to have 12 years of reporting reduced payments, before settled as they are paid off.

How buying your out would work is you would need a settlement amount from your joint mortgage provider.
Your ex needs to get a mortgage for at least that amount. She might be able to get more, depends on her credit history and what she can afford to pay a month.
If she can not raise the funds to "buy you out", by agreement a charge could be put on the house. What that means, is when her share of it is sold, before the money is released to your ex, you are paid the amount that the charge is for.  It is an agreement that she owes you this money, but does not have to pay it until the house is sold.

The only downside is if the house does not archive a profit enough to pay everything, as the mortgage provider will come first, then you will be a Primary Creditor, on the same level as the VAT Man, HMRC, Council Tax or any creditor with a CCJ against her.

The chances of you getting your money faster are limited, as no court would force a sale of the house while the child is in full time education.
Its not a debt you owe, so would have no bearing on any applications you made for credit.

Gifting it could cause no end of legal problems, not only as its going to be a share of a shared ownership house, but things like inheritance tax might come into it, as well as the fact they might not be able to occupy it if to many others lived their.

The fact that you might get some money would have a bearing on an IVA, and also it might be reportable under the terms of your current debt plan. There could be legal issues with your creditors allowing you to made reduced payments as you can not afford to pay the contracted amounts, but then giving away an asset.

Its best to agree the basics yourselves, and then instruct a Financial Mediator jointly to draw it up. Solicitors often refer to potential conflicts of interest if giving best advice, but Mediators have different remits.
Posts made by me are my opinion and any factual information should be checked out. If you do not have a Solicitor, often your local CAB can get you some initial advice.
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