Losing our home

reallydesperatehousewife

What happens to your home if facing bankruptcy

Broken_hearted

If that is all the debt could you not get a loan to reverse his BR, other than that I have no idea.

tigerfeet2006

Hi and welcome to the board.

Have you spoken to one of the debt charities, if not then give National Debtline a call in the morning (they are open till 1pm.) and have a chat. Number in my signature.

How much equity is in the house? Do you have any other debts?

peachyprice

Unfortunately it doesn't work like that BH, to get a BR anulled you have to pay off EVERYTHING, so it would be HMRC and every cc, loan, overdraft, etc.,

Richard_S

Hi rdh,

I know the last thing you want to hear is "if only" so I'll not go down that route.

Theoretically you could have the bankruptcy annulled if you can raise a loan against the equity in your house, but that's an expensive and complicated procedure.

The problem you're facing at the moment is that there's probably enough equity to repay the debt to HMRC and cover the O.R's costs, which will be significantly more than if you'd just paid the outstanding debt, or made a payment proposal at the bankruptcy hearing.

There won't be any undue pressure to force you to sell immediately, but if you can't raise what the O.R deems to be your O.H's beneficial interest then they do have the
right to force a sale.

I wish I could come up with some magic answer, but I can't. If you can't remortgage, or raise the money to buy your O.H's B.I then you're probably looking at having to sell, and moving to a smaller property.

Are you absolutely certain that there's a "lot of equity" in your house? How much is there, and what valuations are you basing it on?

If anything else occurs to me I'll post again; you're not on a flood plain by any chance?

Richard

rog2

Hi rdh - I was in a very similar position to that of your husband. HMRC petitioned for my bankruptcy in 2006 and there was a lot of equity in our house. I too was self-employed and my tax 'debt' was due to unsubstantiated estimates by HMRC who would not accept that my earnings had gone down - I, too, tried to reason with them, but, unfortunately they gradually wore me down. I really do not like to speak ill of anyone, but HMRC, in my opinion, deserve most, if not all, of the criticism that they recieve. Whilst the 'big boys' are openly fleecing the tax system, it seems that, in order to keep up the 'statistics', HMRC come down on the smaller businessman, who often does not have the acumen to even 'play' the system, like a ton of bricks.
After my bankruptcy, the OR appointed a 'trustee' - this 'trustee' was nominated by HMRC as they were my largest 'creditor'. The trustee wrote a letter to both my wife and me, declaring, or 'vesting' his interest in my Beneficial Interest in the family home. In the letter, he said that my wife, or a family member, would have the first option of purchasing my BI. If my wife, or close family member, was either unwilling, or unable, to make an offer to purchase my BI, then he would request that my wife agreed to him putting the house on the market. In the event that my wife did not agree to this, he ponted out that, as a last resort, he could, and would, enforce his rights through the courts. He also said that he would have full control of the sale and would 'account' to my wife, after the sale, for her share of the proceeds after expenses.
Not, I agree, a very nice situation, but, we were able to negociate with the trustee (when we actually got to speak with him, he was not as nasty as his letter implied) over the valuation of the house and, after realising some of her personal assetts and savings, my wife was able to raise a 'mortgage' sufficient to purchase my BI.
The whole process took almost 18 months (we have only just made the second payment on the mortgage) and dealing with the trustee was very hard work - often one step forward and two steps backward. With the, then looming, credit crunch, the Bank even tried to change the terms of the mortgage at the last minute, but, again fortunately, we had a good solicitor who was able to point out, to the Bank, that they had contracted themselves to the mortgage terms. The house is, now, entirely in my wife's name, just in case any other brown stuff should ever hit the fan.
So, yes we went down the route of buying back my BI and have managed to keep the family home. I can not pretend that it is simple, but I will definitely say that it is worth it - we have lived here for 30+ years and, to us, it was a 'home' rather than just a house, with many memories - some bad, but most good - and we did not want to lose it.
Niether can I pretend that the process will be stress free. It has put a strain on our relationship - my wife, inevitably and understandably, feels that I have 'let her down' and that, after ten mortgage free years, to go back into the mortgage trap in our mid-fifties is an admission of failure.
Whilst I am still trying to get my business back on track - again very slowly as I no longer have any reserve capital, or credit facilities, I have taken a low-paid job as a delivery driver - I openly admit that I dislike the job with a vengeance, but I now have a £590 monthly mortgage to pay.
So, fdw, to try and answer your questions:
If you value the house as a 'home', rather than just bricks and mortar, and would definitely like to stay there, then, in my opinion, it is definitely worth looking at the options for purchasing your husband's BI from the OR/trustee.
It is, most definitely, worth your while to get some 'professional' advice. This need not, necessarily, entail employing the services of a solicitor throughout the process - you would, most probably, get some excellent advice from one of the debt charities on how best to proceed and negociate, although you will need the services of a solicitor for the actual 'conveyancy' side of things - ours cost us just over £400, and was worth every penny.
With regard to the valuation of your husband's BI - the OR/trustee's word is not law - you are entitled to dispute his first evaluation - you can, if you wish, get up to three independent evaluations and go for the lowest. But, and more importantly, you can, and should, negociate with the OR/trustee. We were able to negociate a substantial reduction to my trustee's initial demand.
Also, and I know that it might sound obvious, you must ensure that, when you agree a deal, that the OR/trustee confirms, in writing, that this is a 'full and final' setlement and that he (OR/trustee) has, nor will have, any further interest in the property.
Again, as has already been said, the whole thing will depend on the amount of equity in the house, compared to your husband's total debts in bankruptcy. I can not see that the OR/trustee would be able to request more than the total debts, but I'm not sure on this point.
If you feel that you can not afford to mortgage yourselves, there is, also, the option of getting a relative, or very close friend, to purchase the BI - you can always purchase that back from them when your circumstances, as I am sure they will, improve.
I wish you good luck.

rog2

reallydesperatehousewife wrote: »

Hi rog2, thanks for your advice.
We are paying £50 to £100 per week towards the debt, even though we do not have a final figure from HMRC, but at the worst it will be around £10,000, but could be less. I presume that after I sort out the rest of our paperwork with Inland Revenue, they will have a final figure. I believe they add 8% to the debt for every year it is not paid.

rdh - has your husband actually been declared bankrupt yet?

The reason I ask is that, providing you are making payments, as you appear to be, and that you are still 'calculating' the actual debt, then I am sure that, even if they have served a Statutory Declaration, he could still get some time to prepare a 'defence' against an assessment. Even when I arrived at the High Court, for my bankruptcy hearing, the solicitors for HMRC offered me a six week adjournment, but in my case I was unable to guarantee that my accounts would be ready in this time.

I think that there could, therefore, still be time.

Broken_hearted

Is this all the debt he has or are there CCs etc that would need to be cleared. I'm a bit confused over their being a lot of equity but you not being able to raise the £10,000, is it because the household doesn't have a set income. Fully understand how you feel about loosing your home as its something we faced many years \go before I got control over our situation.

rog2

reallydesperatehousewife wrote: »

Husband was made bankrupt in December 07

Thanks, rdh - it's a lot clearer now.

I take on board everything that you say, and can, personally, identify with your situation, more than you may imagine.
At the moment, may I ask, why are you paying between £50 and £100 a month to the OR - is this part of an IPA that has been imposed. If so, I must admit that I am surprised, because an IPA/IPO is based, normally, on surplus income and it doesn't sound as if you have much of that between you.
The Bankruptcy, itself, would have dealt with any outstanding tax debt - actual or assumed. I was advised that there would be little point in me trying to prove that the assessments were unfair as any excess taxes may be 'refunded' would only go into my estate in bankruptcy. Perhaps you have been advised otherwise?
Is the £50 - £100 a month, that you are paying, going directly to HMRC? If so, something sounds wrong to me.
I strongly advise you to take some 'professional advice' from NDL or CCCS - there was another charity, specifically tax-oriented, called taxaid, but I'm not sure if they ae still going (I will google later and let you know).
What exactly has the OR said relating to your house?

Broken_hearted

Agree the world has gone mad, the harder you work and provide for yourself the more crap you get. Doesn't help that HMRC are months behind in opening their mail but thats another story.

rog2

Hi rdw - I can confirm that 'taxaid' is still, very much in existence and can be contacted by phoning 0845 120 3779, between 10 am and 12 noon on Mondays to Thursday.

Their website is: http://www.taxaid.org.uk

Please take a look and possibly give them a call.