The Insolvency service???

Sarah1971

Hi everyone and thanks for all of the excellent advice about how I am to resolve my money troubles. I have managed to reduce my life assurance by moving from hsbc £98 per month to £11 per month. Also cancelled my contract phone and going onto payg, etc etc. Also CCCS are calling me next week to talk about my situation and to help me out contacting companies to reduce payments etc (I've not missed any payments to anyone yet!). So was starting to feel a bit more positive....
But.... I've just got home from work today and have received a letter from The Insolvency Service in northampton saying that my ex husband went bankrupt in August and they know that the house was transferred from joint names into my sole name in April. They say that according to Mr Cox the property was valued at £178,000 at that time of the transfer and that the mortgage was £140,000 and that the official receiver wants me to provide them with the documents confirming the value of the property at the time of the transfer.
I phoned the ex, who couldn't care less and told me it's nothing to do with him and to sort it out myself basically! So i called the company and asked them why they wanted the documents and if there were any financial implications to me. They said no they just want to see the documents to support what my ex told them, but I don't believe thats all??. I am very worried i am going to be forced to sell the house to release equity to pay off his debts. We have no joint debts whatsoever, but i'm still v v worried and starting to think whats the point of struggling on working, looking after 2 small children the house and all the worries, and I should just sell up and move back up North!! Anyway enough of my troubles...

As ever, any help or advice would be greatly appreciated, and if someone could reassure me that my house is safe that would be lovely and a massive weight off my shoulders!

Sarah

Northernbird_2

I would ring CAB or CCCS to get some accurate advice. I don't know much about bankruptcy, but it sounds like they're trying to find out if your ex transferred the house into your name so that the house couldn't be taken into account when he declared himself bankrupt. They can extend the period of bankruptcy from 1 year up to 15 if they feel that he was deliberately avoiding paying his debts.

If the house is in your name, and was at the time he declared bankruptcy, I don't think they can touch it. It's in your name, and as long as the debts he's declaring are just in his name, they have no legal recourse to you or your home.

I know it's worrying when you've come so far, but keep you chin up and make a few calls to find out for sure. Remember, knowledge is power. :cool:

Addicted2Chocolate

The Insolvency Service is a government department, they admister bankruptcies. I work for the Insolvency Service. I would strongly suggest you get independent legal advice. Here is why they have written to you:
once someone is declared bankrupt transactions that have occured before the bankruptcy can be challenged by the Trustee. Commonly transactions incolving transfer of properties must be investigated, to see if they were Transactions At Undervalue.
Is it correct that at time of transfer property was valued at £178,000 and mortgages totalled £140,000? If yes the equity ws £38,000 and as a jointly owned property the ex husbands interest would have been worth half (assuming you cant proof otherwise) so £19,000. So how much did you pay him for the property to be transferred into your sole name? £19,000? if yes £19,000 no problem the trasaaction was for value. Then the Insolvency Service wil, just expect your ex husband to account for his disposal of the money ( ie who did he pay how much & when.
If the property was transferred for nil or for less than £19,000, the transcation could be challenged by the Trustee as a transacation at undervalue. The Trustee would expect you to pay him the difference between what you paid and what should have been paid (eg if you paid nil he will seek £19,000 payment from you, he can make a court application to do this and at a court hearing the court decides, and may make an order setting the position back to what it was eg the court may order the house transfer back into both names and the trustee in effect would own half then as he standsin the ex's shoes). If the transfer was under a consent order following divorce it can still be challenged by the Trustee. The reason is that Insolvency Law has supremacy over Family Law: ie the 'law' thinks the needs of the creditors outweighs needs of families.. i dont personally agree with this of course! Of course you could refuse to provide the Insolvency Service with the requestd information and documents. But they can seek it from third parties: Land Registry records, soliciotr records etc. And if they really want the information they could seek an order for Private Examnation at the Court. So my advice woudl be to co-operate with them.
So if i can be of any help message me. i can try and explain the legislation etc. I would need to know why property was transferred to your sole name, how much you paid for his interest,. how many valuations if any were done and whethe you have kept documents, whethe solicitor dealt with the transfer...
I realise this post is probably not what you wnat to hear..but better you know the implications of the letter you have received...

Sarah1971

Addicted2Chocolate wrote:

The Insolvency Service is a government department, they admister bankruptcies. I work for the Insolvency Service. I would strongly suggest you get independent legal advice. Here is why they have written to you:
once someone is declared bankrupt transactions that have occured before the bankruptcy can be challenged by the Trustee. Commonly transactions incolving transfer of properties must be investigated, to see if they were Transactions At Undervalue.
Is it correct that at time of transfer property was valued at £178,000 and mortgages totalled £140,000? If yes the equity ws £38,000 and as a jointly owned property the ex husbands interest would have been worth half (assuming you cant proof otherwise) so £19,000. So how much did you pay him for the property to be transferred into your sole name? £19,000? if yes £19,000 no problem the trasaaction was for value. Then the Insolvency Service wil, just expect your ex husband to account for his disposal of the money ( ie who did he pay how much & when.
If the property was transferred for nil or for less than £19,000, the transcation could be challenged by the Trustee as a transacation at undervalue. The Trustee would expect you to pay him the difference between what you paid and what should have been paid (eg if you paid nil he will seek £19,000 payment from you, he can make a court application to do this and at a court hearing the court decides, and may make an order setting the position back to what it was eg the court may order the house transfer back into both names and the trustee in effect would own half then as he standsin the ex's shoes). If the transfer was under a consent order following divorce it can still be challenged by the Trustee. The reason is that Insolvency Law has supremacy over Family Law: ie the 'law' thinks the needs of the creditors outweighs needs of families.. i dont personally agree with this of course! Of course you could refuse to provide the Insolvency Service with the requestd information and documents. But they can seek it from third parties: Land Registry records, soliciotr records etc. And if they really want the information they could seek an order for Private Examnation at the Court. So my advice woudl be to co-operate with them.
So if i can be of any help message me. i can try and explain the legislation etc. I would need to know why property was transferred to your sole name, how much you paid for his interest,. how many valuations if any were done and whethe you have kept documents, whethe solicitor dealt with the transfer...
I realise this post is probably not what you wnat to hear..but better you know the implications of the letter you have received...

Hi thanks ever so much for your help,

I have dug out as much infornation as I have regarding the above. Firstly my ex husband has a consent order from the divorce (I divorced him ) and it states that the former matrimonial home shall remain the absolute property of myself and I indemnified him from all liability to payment of the mortgage to the bank (mortgage was £140k). He also agreed to take over an equity release loan (25k), and that I was to pay him a lump sum of £7500 on or before the completion date when the property was transferred into my name. I applied for a mortgage of £152000 of which part was to pay off a build up of mortgage debt of the joint mortgage and some other debts. I paid him the £7.5k and he took on the loan of £25k as i had agreed to take on some credit card debts which i have settled. My valuation my bank had done to transfer the house and mortgage into my name was £165,000.

I would be grateful if you could give me any more advice with what i've given you above? Also do you think the CAB would be the best place to go for finincial advice as i cannot afford to pay for advice nor can i afford to pay any further money to my ex as I am a single parent on p/t wages with 2 small children struggling to survive? If I lose this house that I have struggled to pay for for the last year or so I will be devastated. Surely any court would not see us out on the streets because of an individuals actions, I had no idea he was to declare himself bankrupt, he has obviously done this as an easy option and now I have to pay for it, whilst he lives the life of Riley with his new wife, this is so unfair.

I have a telephone appointment with the CCCS next week do you think thay could offer some advise?

thanks for your help

Sarah

Addicted2Chocolate

So at the time of the transfer the property was valued at £165,000 and the mortgage was £140,000. So the equity was £25,000 and your ex husbands interest would have been worth £12,500. You paid him the sum of £7,500 so it may be considered a transaction at undervalue £5,000. I think you should try and get advice from CAB and CCCS but as this is a specialist area they might not be very helpful. I think you could write in reply stating the facts and providing suppporting documents including the bank valuation, the mortgage statement at time of transfer and the consent order. In the letter make it clear you are not in a position to provide any funds and you are not prepared to remortgage or get into further debt. Maybe include a statement of your income and outgoings.
Once the Insolvency Service have got your letter they will decide whether or not they believe it was a transaction at undervalue. If yes they are not funded to take the neccessary court action, so they will call a meeting of creditors to see if the creditors want to fund the appointment of a Trustee. Your ex husbands creditors are unlikely to want to fund a insolvency practitioner, as they see it as throwing good money after bad: ie they are unlikely to risk further loss. Hope this makes sense. Dont panic, if a insolvency practitioner is appointed and takes court action (unlikely as we are only talking about £5,000) then you would likely qualify for legal aid. I think an IP would not take this case if this transaction is the only 'asset' as the costs of the court action would exceed the £5,000 benefit if they won the case. Good luck, let me know what happens....

Sarah1971

I'll let you know what happens. thanks again for your help

Sarah

Addicted2Chocolate

Hi Sarah
I read you original post and replies again and think i may have made a mistake.
At the time of the trasnsfer how much was the total secured debts against the property?
if i have read correctly
1st charge: mortgage company £140,000
2nd charge: secured loan £25,000

total secured debt £165,000 at time of transfer? If this is right, then there would have been no equity in the property. So in theory if you paid £7,500 when there was nil equity it was not a transcation at undervalue at all.
But I am confused how he can have taken on a secured loan? did the secured loan company give up their security and agree to laon being put into his sole name and becoming unsecured (as it cant be secured after property was transferred into your name)? i cant see why they would give up their security......

Xbigman

Also, if credit card debts were in joint names and you took them on as part of the divorce settlement, then half of that should count against the equity as well. Can you list all the details for us, total of joint and secured debts, that was inviolved. It looks like you might be ok as there was effectively no equity. Your divorce settlement will be an important factor in this.
Regards




X

Sarah1971

Addicted2Chocolate wrote:

Hi Sarah
I read you original post and replies again and think i may have made a mistake.
At the time of the trasnsfer how much was the total secured debts against the property?
if i have read correctly
1st charge: mortgage company £140,000
2nd charge: secured loan £25,000

total secured debt £165,000 at time of transfer? If this is right, then there would have been no equity in the property. So in theory if you paid £7,500 when there was nil equity it was not a transcation at undervalue at all.
But I am confused how he can have taken on a secured loan? did the secured loan company give up their security and agree to laon being put into his sole name and becoming unsecured (as it cant be secured after property was transferred into your name)? i cant see why they would give up their security......

Hi Yes the mortgage was £140k and there was a secured loan (£25k)which was originally in joint names but as he wanted a quick divorce to allow him to remarry, he did all sorts of things to speed things up and he somehow paid the secured loan off releasing me from it, this was before the transfer date unfortunately. so this leaves £25k equity divided by 2 = £12.5k and less the £7.5k payment to him = £5k. Also as I also said I was left paying for the mortgage from when he moved out so why should the equity be based on the transfer date?

I hope I have a good case. I am putting all of this into a letter to send off with the requested documents, so fingers crossed.

Thanks
Sarah

Sarah1971

Xbigman wrote:

Also, if credit card debts were in joint names and you took them on as part of the divorce settlement, then half of that should count against the equity as well. Can you list all the details for us, total of joint and secured debts, that was inviolved. It looks like you might be ok as there was effectively no equity. Your divorce settlement will be an important factor in this.
Regards




X

Hi there,
Unfortunately although joint debt on the cards they were in my sole name! The sort of thing you do when you trust someone, silly me!?

The only secured debt at the time of transfer was the £140k loan, which I had to up to £152k for the mortgage in my sole name

Its just so annoying that after the last year of struggling and meeting all payments this can happen to me, even though no-one asked my consent to the bankruptcy. Surely if it was known this would effect me i should have been told or advised??!!

Its just not fair

Anyway sorry for moaning and thanks for your comments above.

Sarah

jen_jen_2

i agree with addicted to chocolate, i really dont think the OR will be interested, they only want evidence that your ex isnt ripping off creditors. if his equity was £12 and half K and you gave him 7 and a half i dont think thats undervalue at all, the OP will consider what the half an asset is worth to the general public and who would buy half of 25 k equity in a house someone else lives in? so in reality it wasnt at undervalue.

they may be interested in how he spent the 7.5 k though (not your problem i know and may even cheer you up)

you also took on debt accrued in the marriage and even in your name could have been considered joint as part of the divorce eg he should have had to pay towards them.

if they do consider an asset of 5 k exists it will cost more in their time and charges to chase it up, again who will buy 5 k of a property that they cant live in. theOR cant spend more money than the asset they will realise because its just not worth it.

send all the info off and dont worry, i really doubt it will come to anything.