Questions you have before making a decision to go Bankrupt and the Bankruptcy process

Moderators: TalbotWoods, JaneClack

By jackthelad
#8483 I've been looking to sell my house and rent it out afterwards. There would be no equity, as the buyer would only pay what was left on the mortgage. I would then rent and still live there.

Anyone know if this is o.k. Although I know there is to be a bankcruptcy hearing, I can say I don't know what the result will be.Would this cause me any problems ?

Jack
By Mel_Odious
#8486 Don't quite understand Jack.
Are you saying you know of someone willing to buy the house for the price of the outstanding mortgage and will let you live there as a tenant?

If so this could possibly be seen as a sale at under value and the OR would intervene and could possibly ask the purchaser for any shortfall between the buying price and the actual value. This is what I would assume as an amateur, I am not a professional advisor and could be wrong. Sarah may know better.

Mel
By jackthelad
#8488 Mel,.

I did wonder about that, but this would be the value, if anyone sold their house this way. Is this still less than market value ? The buyer is unknown to me personally, it is purely business and I would not profit in any way.

Would it not be considered as me trying to keep a roof above my family's head ?

Regards,

Jack
User avatar
By Joannec
#8489 I'm not an expert, but I would think that it is actually putting an asset out of the OR's reach and if so, the transaction will be overturned.

Anybody else?
User avatar
By steveo
#8491 this does sound like a very dodgey thing to do, selling a asset for less than it's true value is a NO-NO as far as the OR is concerned. they can apply to the courts to get the purchase overturned. even more of a problem if you have furthur loans which have been secured on the house.

i suggest you see the CAB or at least read the FAQ on the insolvency website:
http://www.insolvency.gov.uk/guidanceleaflets/happhome.htm
ByDavidc
#8493
jackthelad wrote:Mel,.

I did wonder about that, but this would be the value, if anyone sold their house this way. Is this still less than market value ? The buyer is unknown to me personally, it is purely business and I would not profit in any way.

Would it not be considered as me trying to keep a roof above my family's head ?

Regards,

Jack

I do not quite understand either. Are you saying at the moment there is no equity in the house if the OR had it valued ? Or are you planning to sell it for less than it's value in which case it will simply be overturned. If not a member of the family could buy the beneficial interest for £1 plus the fees of course. You could then have your house back after you were discharged.
David
By Mel_Odious
#8494
jackthelad wrote:Would it not be considered as me trying to keep a roof above my family's head ?
Regards,

Jack

erm, well no actually Jack, that would be the compassionate way of looking at your situation but unfortunately Official Receivers are not known for their compassion. They are hard headed professionals with a job to do and that is to realise any of your assets to pay back to your creditors some of your outstanding debt. They would not be swayed from this as all the creditors will be made aware of your financial situation and they would never stand for it. I see others have now agreed that what I initially surmised is correct so "no way Jose" I'm afraid.

Mel
By jackthelad
#8505 Thanks folks,
I get the message. I was only thinking of ways to save the house, so we could still live in it - I would have gained nothing.

Nevermind, I'll have to think of something else wont I !!

Thanks again,

Jack
By Mel_Odious
#8506
jackthelad wrote:Thanks folks,
I get the message. I was only thinking of ways to save the house, so we could still live in it - I would have gained nothing.

Nevermind, I'll have to think of something else wont I !!

Thanks again,

Jack


No family or friends that could buy out your share?
If you have kids the OR should give you a year to sort it.
Read the literature on the Insolvency website "What will happen to my home?"

Mel
By jackthelad
#8508 Mel,
Unfortunately not, one girl only 16 and other, who doesn't stay with us, poor and about to go to university. Don't think any other family would be interested or able to. Equity about £20k less conveyancy fees.

I've read the pamphlets and info available, can't see an answer there. Will keep thinking though !!!!!!!!!

Thanks for the help,

Jack
ByVanessa
#8519 If you are careful, you should be able to sort this out without losing your home as the OR will not take action for the first 12 months ( as your partner's interests are considered a priority ). Assuming yours is a straightforward bankruptcy, you could then re mortgage on discharge to buy the remainder of the equity back from the OR - bear in mind if it is just you going bankrupt, you are only buying HALF the equity back as the other half is vested in your partner.

THe OR is less amenable to reducing the amount due to him through including conveyancing charges etc as most will maintain that these wouldn't arise ( spiteful but the whole B business is an accounting process, not an episode of Trisha ) although you may be able to haggle some discount.

Have you had a valuation and asked the mortgage company for a redemption statement recently ?

I take it you are aware that you can keep a mortgage ( as long as you pay it ) during bankruptcy - I wasn't sure before mine although I am sure you are more wily !

I don't think it;s as bleak as you think ! If you are going B alone ( and not your wife ) then it may be worth considering letting out a room ( her income not yours ) to help fund the remortgage - not ideal but if you want to keep the house .. ?
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By JaneClack
#8533 Vanessa has the right of it - it is your part of the equity only that is at stake as even if your wife/partner has never contributed by just being there and looking after the children so you can work will give her 50% if she decided to divorce you (although obviously she doesn't) so this is the same in bankruptcy.

I have seen many people do this (i.e. buy back the equity - could your wife not raise it?) so give it a go rather than trying to evade anything which is exactly how your first suggestion would have been viewed. So you have made the right decision

as Fagin would say , I am reviewing the situation.....
By jackthelad
#8696 Unfortunately, we have both been included in the original IVA and will both be quoted in the bankcruptcy - sorry if I didn't make that clear, straight thinking recently hasn't been easy. We both have secure ( as there is these days ) jobs and work full time.

Even though my wife is only party to £16K of debts and I alone £53k ( albeit with loads of interest ) we were advised by the Debt Counsellors, whom we originally contacted, that we should apply jointly. The state our finances were in, we thought this might be better, although now I'm beginning to wonder. Is it too late - Petition will be heard late next month - to try and change this ?

Any advice would be welcomed.

Thanks,

Jack
By Mel_Odious
#8700 If it was a joint IVA then I guess it will be a joint bankruptcy so how do you think you will be able to change it now? It is the IP petitioning, no?

Mel