Scottish and English debt laws are different, so if you are a Scottish resident and have questions on debt, then this is the place to post.

Moderators: TalbotWoods, JaneClack

By singalong
#309163 Hi

My ex husband has told me he is going bankrupt. We have been divorced now for one year and he signed the house over to me. I wanted to secure the house for my child and I. I borrowed £10,000 from my parents to put a deposit on my house to afford the mortgage myself, the deeds were signed over and the new mortgage is in my name only.

I haven't missed a payment and can afford the mortgage just, I am now worried that with my ex's bankruptcy I could possibly lose the house.

I have put considerable work into the house and lowered the mortgage since my ex and I split up, so there will be some equity. I can't afford to pay out any money. Is there a way out of this?


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By TalbotWoods
#309193 Hi Singalong

Can you please bare with us for a couple of day, as I need to seek some advice myself on this. Though I suspect I know the answer, I need to confirm that what I suspect is correct (if that makes sense)

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By JaneClack
#309203 I shall be asking this question of a Scottish IP but can tell you that in England and Wales when there is a divorce etc involved in the recent past (up to 5 years) and a transfer of ownership they will do something called "equitable accounting".

This takes into account improvements made, payments and investments made into the property, increase in value and notional rent due since ex was no longer welcome in the marital home! This should protect at least some of any increase of equity. And remember they start from an assumption of 50%.
By singalong
#309213 Hi Sarah

Thanks for your message Sarah, Tim I will wait for your feedback. Taking into consideration the value of the home when he was 'no longer welcome' in the home was £130,000. I put the house up for sale and it didn't move for a year. Our mortgage at the time was £107,000, my mortgage now is £87,000. I am really worried they will try and take at least £10,000 from me. I just cant afford it, which would mean forcing sale of the house and losing any prospect from moving forward from this. It's completely not fair that my daughter and I should have to suffer for his debt. I don't think they will entertain paying £500 or whatever it is to buy his interest out of the house because of the equity.

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By JaneClack
#309253 I have received the reply which am quoting verbatim - but remember we do not know all your circumstances and this is really not the place to answer in any more detail and I would suggest you get some legal advice in Scotland:

If there was a divorce where the court ordered the property to be transferred over from husband to wife, then it's unlikely the court will overturn this in bankruptcy. In this instance, due to the equity at the time being 130k, with mortgage of 107k, therefore being 23k equity.

It's unlikely court application will be made on this due to there only being 11.5k equity. After court costs and selling costs unlikely to be much left for creditors. However, client may still be asked to buy out his interest - in which case she just needs to explain that she can't afford to, and after this, the Trustee may either accept a notional amount or go away, as it's not worth a court application.
By singalong
#309263 Hi

Thank you for your reply, I have this with my lawyer at the moment, I just waiting to hear from her. Yes I think the house was transferred with Divorce, I say 'think' as it was done around the same time but not sure if it was seperate.

Thanks for your help.

By wdm2
#309303 You certainly have cause for concern. It's challengable under section 35 of the Bankruptcy Scotland Act 1985 (Recalling of order for payment of capital sum on divorce.)

Para 2 of that section says:

Where this section applies, the court, on an application brought by the permanent trustee, the trustee acting under the trust deed or the judicial factor, may make an order for recall of the order made under the said section 5 or 8(2) and for the repayment to the applicant of the whole or part of any sum already paid, or as the case may be for the return to the applicant of all or part of any property already transferred, under that order, or, where such property has been sold, for payment to the applicant of all or part of the proceeds of sale:

The good news is that the section goes on to say before making an order under this subsection the court shall have regard to all the circumstances including, without prejudice to the generality of this proviso, the financial, and other, circumstances (in so far as made known to the court) of the person against whom the order would be made

So the law provides some wriggle room for the court to look at your circumstances and decide that to issue an order against you would be unfair.

In all likelihood the trustee won't pursue it for that reason if they are satisfied you really can't come up with the money.

I'm afraid I don't think it's one where absolute peace of mind can be guaranteed though.
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By TalbotWoods
#309333 Hi Signalong

OK I've also heard back and I see that both Sarah and wdm2 have both answered this already.

I appreciate that it looks bleak, BUT, there are things to bear in mind.

Firstly the property may not hold as much equity as you hope, it would pay to get a valuation done, (and explain to the valuer why, so you get a real value and not a whimsical for sale value).

Depending on how long you and your ex jointly owned the property also has a bearing, the long it was jointly owned the higher the beneficial interest will be looked at.

Depending on how long he has 'not been welcome' will also effect the amount that could be calculated in equation, the longer he has 'not been welcome' the better, as this then opens the a strong defence.

The situation is defendable, especially if the property formed part of the divorce settlement, as it would have been considered in court as an asset in his financial statements.

Recall can be carried out, BUT and this is the biggy for you, the lower the Beneficial Interest the less likely that this would be pushed, as if you held out it could become totally un-viable for this to proceed in court. That is it would cost them more to force the court issue in costs than they would raise.

Also bare in mind you have also contributed a further £10K into you pot of the beneficial interest

SO the insolvency service would need to look at BI and would obviously ask you to contribute that, however, if they knew a court case was going to purse, which was going to cost them,they often back down.

But having said this you need to prepare.

Get that valuation done (which needs to be low)

Plus time he has not been welcome or contributing (the more the better, and from the figures you infer I suspect this may actually be quite some time)

Equals minimum Beneficial Interest

Get the circumstances to work for you NOT him

Seek advice either from your CAB or from a solicitor