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

Moderators: TalbotWoods, JaneClack

By Plymstrings
#318043 Hi all,

Hopefully someone can help. In the last two years, I have had my business fail and my marriage break up. I have finally had to accept that I will become bankrupt, and I have a county court appointment in two weeks.

My problem is the house my, soon to be, exwife and I used to share. We have put the divorce petition into the courts this week. She lives in the house and I live in rented accomodation. We have circa £60k equity in the house, and we are discussing the equity split.

When all is said and done, I do not care for myself at all, all I care about is the home that my two small children live in. They are my absolute everything, and it pains me everyday that I don't live with them, but such is life.

I would like to do absolutely everything possible to prevent the sale of the house, as the house is their home. My eldest is registered disabled, and I would be devastated if he lost his home :(

The equity is circa £60k at most. We are talking about a split of more like 60/40 in my ex-wifes favour, I'm not being greedy and everything thus far is amicable.

My indebtedness is about £50k due to failed business etc.

How likely is it that they will try and force a house sale ? If the equity is 'say' 60/40, then my share would be £24k before liquidation costs etc.

Any help greatly appreciated, like I say, it's just my two little boys that I care about. I don't care if I have to live in my car ! As long as my boys have their home :)

My county court appointment for bankruptcy is in two weeks.

Many thanks in advance.
By adamr2
#318053 not 100% sure so dont take this as fact

but I believe that while you can sign the house over to your ex wife, if you do so shortly before going bankrupt, then it'll still be included in your bankruptcy, I do not think you will be able to keep the house im afraid.
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By JaneClack
#318073 The house is going to be involved and unless it has been specially adapted for your disabled child this will not make any difference.

However, if someone could buy back your beneficial interest from the Trustee it would protect the home.

The trustee's office will do something called equitable accounting to show your beneficial interest in the property and it starts from a basis of 50/50 and goes on from there - unless it can be shown that your ex put down the deposit or something else. If you go to a solicitor to try and get a deed of trust now showing a different split without proof then this transaction could be overturned - which is why many solicitors do not want to do this if they know a bankruptcy petition is being considered.

I should also ask if you are still on the mortgage; are you still paying the mortgage??? All these things need to be considered but what I can say is that they will give you time to sort this out.
By Plymstrings
#318133 Thanks for your replies.

I haven't paid into the mortgage for a couple of years, and the land registry form has been sent off so that the mortgage can be in her name only.

Really have done all I can to avoid bankruptcy but I'm just so concerned for my kids !

Thanks again.
By darkangel
#321353 Hi Plymstrings
May I offer the following experience/advice that I was given and which has given relative peace of mind so far.

I have 6 creditors and am possibly in a worse debt situation than you (ie I am in a very bad state) after business failed. 2 creditors have judgements against me and I am paying them. The others seem to have disappeared having not contacted me in 4 years - I changed address and nthey have not yet found me even though I don't hide. However, I accept that they may turn up and take county court judgements.

My solicitor advised that I accept county court judgements and pay them rather than declare bankrupcy, my disposable income is not great and so I have done this for just over 5 years now. My wife took control of the home, the mortgage and deeds, at that time and I borrowed nothing after that transfer of title. I changed address and separated my business address and life from the home in order to remove the influence of the debt from her life. We are still married but I have effectively divorced my finances from hers. I pay her a sum each month for children's education and support, the rest of the finances are hers.

Solicitor is of the mind that the increasing distance in time has now reduced any beneficial interest to the point that I should now risk going bankrupt and pay any of that beneficial interest that might be ajudged rather than keep paying the £320 a month on the county court judgements - whether its 2 or 6 creditors that is all I can pay. I won't be doing that yet though since I do not need to borrow money (there are better ways to get through life), and will continue to pay the judgements and sit tight unless a creditor forces bankruptcy on me. I feel that my wife and children are getting safer each passing year.

My point is that you still have options. The court can only enforce what you are able to pay, and any distance that develops between 'gifted' assets and bankruptcy is a bonus to you. You have the choice in when to declare bankruptcy unless in the extreme they force it on you It was well worth getting the legal advice which was a minimal cost.