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

Moderators: TalbotWoods, JaneClack

By chivasgirl
#2675 Have a couple of queries relating to bankruptcy. Have contacted Simon Wiggins as well but these are questions I have which people may have experienced themselves.

Really desperate not to lose our house if I go bankrupt. My husband is in a similar situation but has alot less debt so will possibly be going for a DMP or IVA. However, my biggest worry is losing the house, not least of all because it will be so hard to rent anywhere with the credit rating we are now accumulating, but impossible with pets.

We have very little equity, probably between £6k and £10k, basically the deposit we paid in July when we bought it and what value it might have increased to. Just wondered if anybody else has been in a similar situation and retained their house.

Questions:

1. If we sell the beneficial interest in my share of the property to someone else, is there any way they could lose their money if the OR instructed us to sell?

2. If we sell the beneficial interest, can we use that money towards the mortgage or only towards my share of the mortgage as it would have been my share of the beneficial interest?

3. If the OR instructs us to sell the property, would we have time to find a new property, if my husband isn't being made bankrupt, just me?

Had a call with the CCCS today but as my new job doesn't start until mid-Jan, they can't really help us until the job starts. :(

Any advice is appreciated.
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By JaneClack
#2681 In bankruptcy your proportion of the beneficial interest will be vested in the Official Receiver i.e. he will "own" it as it were. It can be bought back from him by a third party and if this is the case then he has no further interest in it! It is usually done by a relative or friend - in your case, NOT your partner as this would mean he would own 100% of the equity and in any VA scenario the creditors would want compensation for it. In a DMP this is not taken into account as the whole debt will be repaid. Hope that helps although I am sure Simon will fill in any further blanks.
By chivasgirl
#2690 Sarah, thank you for your very prompt response.

If we sold the beneficial interest before I declared bankruptcy, if that was the way we went, does that mean that the OR would not force us to sell the house? If we did sell the beneficial interest, would we be able to use that money for paying priority debts in the meantime, or would it have to be used to proportionally pay creditors?

Regards
Lorna
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By JaneClack
#2691 No - your beneficial interest is what is left if the house were sold and your partner had his share. So if you sold the whole amount you would have to prove that it was bought for the right sum and not under value as the OR would be able to overturn the sale if this were not the case. If any equity was then left it would be divided into two again as there are two of you. This money is not yours as such - it is part of the bankruptcy estate and if it had been used to pay off some of the creditors to leave only some for the bankruptcy, it could again be regarded as not being fairly distributed. If you are going to go bankrupt go to one of the free debt advice services first and follow their advice but the bottom line is that in bankruptcy it is not your beneficial interest any longer!