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

Moderators: TalbotWoods, JaneClack

By Shell-e
#4159 Right,

My bloke has a Golf R32, he bought it on HP but was costing alot so his dad cleared the finance (£23k). My bloke is the registered owner and keeper and no finance left on it.

My bloke owes over 25k - sell the car pay off debts i hear you shouting, basically if he was to sell the car now, he would only get about £17k for it, its slightly damaged at the mo and he would need to get this fixed before he sold it (and got the 17k expected), he can not afford to do so at present, also if he sells the car, he has to give the money back to his dad.

So he is in a bit of a dilemma, either he sells the car and gives the money back to his dad then he has to explain to the offical reciever why he did this and not pay back his debts as this is his biggest asset, they may not listen to our argument that it is in fact owned by his dad, just just given to my bloke.....

Or we get the car transfered to his dads name and his dad be the legal owner....will the offical receiver be able to see that he has changed the car to his dads name? - not that there is anything dodgy in it but they might think there is? They might want to take the car? Could they?

Also....if we change the car to his dads name, should we wait a while before petitioning for bankruptcy? This car issue is the only things thats holding us back really?!

Thanks in advance!
#4185 Hello

This is a tricky situation.

If you pay all the money back to your OH's Dad - then this would be looked upon by an OR as favouring one creditor over the others, and the transaction could possibly be reversed.
With regards to your statement 'they may not listen to our argument that it is in fact owned by his dad, just just given to my bloke' - well, you admitted in your first sentence that your bloke bought the car on HP (and his financial records, which the OR will examine), will show the HP payments! So there is absolutely no point in trying to transfer the car to his Dad, that's one of the oldest tricks in the book and any OR would see straight through this.

Could your OH not sell the car and offer the 17k as full and final settlement? This may be accepted by his creditors, which would mean he wouldn't have to go bankrupt, and he could pay his Dad back in installments. Or simply pay off the large proportion of the debts, which would free up some money to pay back his Dad.

The fact is, realistically, that your OH simply cannot pay his Dad back in one lump sum as things stand at the moment.

I know it's probably not what you wanted to hear, but unfortunately that's the way it is; in the eyes of the law your OH's Dad is a creditor just like the others. It's harsh to say - but it is does seem a little foolish driving around in a 17 grand car when you're 25 grand in debt.
By Shell-e
#4187 Your right it wasnt what i wanted to hear! But still you made some valid points.

If he sells the car say for 17k then he needs to buy another car, insure it and then have even less to offer the creditors, also as hes living with his dad i think he would prob find himself in hot water if he used the money to pay back the other creditors!

He is all ready to go bankrupt, we just need to sort this out first.

When they check about the HP which was orignally on the car - they will see that his dad paid it off and so wouldnt it make more sense to have it registered and insured in his dads name? His dad would use it and he would just be a named driver like he is on my car insurance?

When i mentioned this briefly to CCCS they said that we should sell the car and give back the money to his dad and argue that it was his dads property in the first place!

Its so stressful!
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By JaneClack
#4190 You could do that and if they disagree they will go to his father for the money back. However, if there is proof that he paid it all off there should be no problem. However there is the problem of how he will get to work without a car that you need to address - it might even be cheaper to buy it back from the OR. Perhaps some others have other ideas?
By Shell-e
#4196 The way i see it is his dad bought the car to help him out of debt, my blokes currently the registered keeper, his dad has asked for the car back but will still allow him to use it....If he gets the car transfered into his dads name, the insurance in his dads name and him as the second driver then he can just use 'his dads car' for work - its all legal and above board then yeah?

We really need to get this right before we go ahead!

His dad would rather keep it than sell it.
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By JaneClack
#4197 That looks fine to me. Registered keepers are not always the owners of a car and as long as you have the proof that his father paid off th HP and now owns the car, it is fine.
By Shell-e
#4200 Your a star Sarah - thanks!