Every Tuesday, we find an expert to answer your financial problems or consumer disputes – you can WhatsApp us here or yessend money to blog@sky.uk. Today’s problem is…
My mother separated from her partner since 2006. I know that divorce was not possible at first but in their separation agreements they divided their debts and explained who pays what.
Since then, my biological father has been abroad, from Germany to Saudi Arabia, and has neglected to pay his debts that my mother has been receiving letters for at her home address. He recently opened a letter about a £700 loan from 2003 that still needs to be paid, from his father’s side of the deal. Mom dutifully explained the situation and finally agreed to just set up a payment plan for this to prevent more letters coming through the door.
I wonder if there is a need for him to do that. I advised him to talk to a lawyer about this but he is reluctant because of the high fees. Ultimately I don’t believe this is right. On top of this there is the fear that our house, if it is sold, will be 50% of my father under the matrimonial property. He has paid off most of the mortgage since their breakup and has just paid it off.
Ross Coyne
Hi Ross, Thanks for contacting me about this problem and I’m sorry to hear about your mother’s situation.
There are several factors to consider but the most important ones will be the validity of your mother’s separation agreement and debt repayment.
I spoke to Shivi Rajput, a partner at Stowe Family Law, about this, and she explained that separation agreements are not as legally binding as a court order.
They are private agreements between two separate partners that can set out arrangements regarding property, debts and maintenance.
This means that it is not binding on creditors, and does not prevent someone else from applying for financial assistance later.
What does this mean for a £700 loan?
For a £700 loan, the creditor can only pursue contractual obligations.
So, if the debt was in your father’s name only, he is the only one who has to pay it, but if it was in both their names, the creditor can pursue both of them to pay.
Rajput says the first thing to establish is whose name the debt is in, which the mother can do by asking for the original loan agreement and proof of her participation in it.
“If the debt is not his, he has no obligation to pay and should send a written notice to the debt collector,” he says.
It is important to remember that the loan is for a person and not an address, so if the letter is sent to his home just because it is the address your father registered the loan with, there are steps he can take.
Debt charity Step Change says you can send a copy of your tax bill to the people trying to pay you to show who lives at that address – which will prove your dad doesn’t live there.
You can also write “not to this address” on the envelope and return it to the sender.
Letters from courts, bailiffs or District Court judgments should not be ignored, even if they are sent to you in error. You should tell them they have the wrong address and ask them to update their records.
If your mother is responsible for the debt but the separation agreement guarantees that your father will pay this, then Rajit says you should keep the payments to protect his credit score and ask your father to pay him.
Another thing to consider here is when the loan was made.
Since it was bought 23 years ago, Rajput says it may be banned under the Limitation Act 1980.
This applies to debts that are more than six years old and means that creditors cannot take legal action to recover them unless payment or written consent is given.
This six-year clock starts again once a payment has been made or there is a written acknowledgment of liability.
“Since your mother has agreed to set up a payment plan, this may have already started the period, depending on what exactly was agreed upon and whether she was legally bound in the first place,” says Rajput.
“Obviously, debt is important before any other payments are made.”
What about family?
You also asked if there was a risk that your father could claim 50% of the family home.
Rajput said the court will consider various factors when considering what the appropriate division of equity will be.
The primary consideration will be the needs of your mother and father, but others will include:
- The length of your mother’s and father’s marriage;
- A long time ago they were separated;
- Contributions made;
- Any agreement they made at the time of separation.
The first point is that family income is usually shared equally, but this is only the beginning.
“Your parents have been separated for 20 years, during which time your father did not contribute to the mortgage and was not financially stable,” says Rajput.
“After the separation and your mother’s large financial contributions are the relevant factors. If your father’s household needs are sufficiently satisfied, this will be important.”
Since your parents are separated, it is possible that they are still legally married, and if that is the case, Rajput says your mother should seriously consider starting divorce proceedings.
If not, he could get a financial consent order, which would detail what would happen to the family.
He can also get a clean break order – a legally binding financial order that cuts all financial ties between his ex-spouses – which will make it clear that your father is responsible for his debts.
“Until this happens, their funding applications remain open,” Rajput says.
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