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

Moderators: TalbotWoods, JaneClack

By chivasgirl
#3332 My in laws were intending to purchase my share of the beneficial interest in our property. We have had a valuation by a surveyor (from an estate agents, but still a paid for proper independent valuation). In laws went to see a solicitor today and were advised not to do this, because the OR would be able to revalue our property in a year's time and then my in laws would be responsible for paying the extra equity to the OR. I have never been advised anything like this (Simon has given me alot of advice in relation to this and I do feel his advice is invaluable).

My question is has anyone else encountered anything like this? I think this has scared the bejesus out of my in laws and I don't think anything is going to make them do this now. They have been advised that I am best off going bankrupt and letting the OR deal with the beneficial interest. I really don't want to do that, but if they won't do anything before long, I will be forced to go bankrupt without a trust deed in place.

I am going to post on the Expert for Simon's expert opinion on what to do but any experiences appreciated.

Thank you.
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By JaneClack
#3335 I have not heard this before but you can sell the beneficial interest in the bankruptcy itself as the OR has to check it anyway - to ensure there have been no transactions under value. However, after it has been sold and the right amount paid they will not revalue again.

Does anyone know different? I too will see what Simon has to say.
By chivasgirl
#3337 Have just read their website, they deal primarily in litigation and debt collection, acting for the local county courts (including the one I would be going to). They do also offer "personal" advice but it doesn't specifically say financial. Just doesn't seem right, almost (but not legally) a conflict of interest.
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By JaneClack
#3338 Was this the solicitor's your parents-in-law went to? - suggest they see an insolvency lawyer for more informed advice!
By chivasgirl
#3339 The solicitors apparently told my in laws that they knew it was possible that the OR could request a revalue at 6 months or a year because they had acted for the OR before. I think it was most definitely a bad choice of solicitor and that they should find another one. But it is still concerning that if they DO act for the OR that it is possible for the OR to revalue. My impression was that once you had sold the BI, the OR was happy that your liability had been met, took that money off you and that was that. Of course I expected a proper valuation to be a given and we did that. My share of the BI is under £4k, but of course in a year that could go up with no assistance from us (DIY etc) to £20k.
By Bayroo
#3340 I would really like to know the out come of this as I am thinking about going down the B route, and have some equity in my property.
By Bayroo
#3341 I found something that may help -

Generally OR's look at homes with a veiw to a quick sale (say within 8 weeks to completion) which generally drops the price by about 10%. If you are saying your property is worth 40K then an OR may consider it to be worth 36K Take away your mortgage 28K leaves 8K However out of this would come the ORs costs and any fees such as estate agents etc so it is likley in this scenario that they would consider the real equity to be about 5K. The only way to avoid any risk to the home is to take it out of the picture preferrably before you went ahead although many people do so during a bankruptcy itself. A relative or other third party would need to purchase the current 7 future beneficial interest in your home from you. This is what it is worth over and above any charges secured on it less sale costs. This can be done by a local solicitor for about £250.00 The 5K should then be paid to your crediters either in part repayment or as part of a full and final settlement offer to see if they will actually accept less knowing you did not have an assett any longer. The sooner this is done the better as in most cases house values are escalting all the time and so will the amount that has to be paid to take the house out of the picture. If this is not possible then your homw would be at risk. In the case of a married couple the partners interests take presidence for the first year if the other partner goes bankrupt after which the OR can and does sell the home to part repay the debts. If you are in a posistion to be able to arrange this the interest can be transferred back to you after the bankruptcy expires. In essence you could either be given it back or purchase it back. THe only thing that has to occur here is that you should get several valutaions from local estate agents on the over quick sale basis and do the calculations based on the lowest of these. An OR can only undo a trnsaction if it can be shown to be at undervalue. As the relative or third party will actually be giving you the true value of the interest the OR can not undo the transaction. I hope this clarifies the matter for you
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By JaneClack
#3345 Yes, Simon does know his stuff on Ask the Expert. I did notice that Vanessa commented the other day that the OR likes to have a paid valuation - not just estate agents valuations. I would recommend doing the free ones first and then if it looks reasonable get the paid valuation that the OR cannot dispute.
ByVanessa
#3346 Chivas - I wouldnt worry too much that the solicitor your parents met with also does recovery work - most do - as any discussions would be considered privileged information as THEY are the client.
By chivasgirl
#3348 The valuation was a paid one, so no problems there. At least I hope not!! If the OR had a problem with one which would be no more than a month old by the time I do this, we'd be worried. My main worry is doing the big B without having sold the BI. I have seen so many reports where people are having trouble agreeing the BI that it seems like madness to go ahead without sorting it out, but there's nothing I can do if my inlaws daren't do it beforehand... Frustration and stress levels increasing so much, had migraine since Saturday.

*warm thoughts of soft fluffy kittens* (trying to make myself relax!)
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By JaneClack
#3350 Simon has now replied to your question in depth and I think you will find his answer quite extensive and should answer your query.
By chivasgirl
#3351 Thanks Sarah, I have just read that. I only posted on here really because I wanted to hear other people's experiences, I think Simon's knowledge is invaluable but at the same time, if someone else had said "well actually that's similar to my experience, but actually what ended up happening was ...." it would just have given me a bit of extra support for approaching inlaws again.

I will let you know how it develops!
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By JaneClack
#3354 Please do - that is exactly what this forum is for! :lol:
By chivasgirl
#3357 Well a bit of an update: hubby spoke to an IP today who was very positive and as well as tell us that the advice we've received so far (ie, from the forums and Expert) is accurate and informed. The advice from the solicitor not so.

He has actually recommended that we DO wait until after bankruptcy because he says in his experience, and he helps alot of people go through bankruptcy, the ORs in our area are more likely to actually reduce the amount from 50% of the value of the beneficial interest, as they tend to take into account the costs of forced sale, their costs etc. He also thinks that it would be a done deal very quickly as long as we had all the necessary paperwork to hand, mortgage redemption figures etc. We also have the valuation from when we bought the property which supports the current one, in that it was 7 months ago and is £1k more than the original, in line with the house prices.

We are going to see him for a free consultation next week and at least find out what he has to say. I'll post again after that, unless some other scare moment comes up in the meantime!

CG
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By JaneClack
#3358 Good - we look forward to hearing from you.