Selling our house before Brankrupty

jsmith13

Hi,

I'm a newbe and just wanted some advise. We are selling our house to my parents at full market value, and after selling we will not be living in the property. My parents will be renting it out to someone else.
Due to other debts in our business, which due to the recession, isn't doing too good, we are going bankrupt in Dec. Will this effect this sale or my parents in any way?

Thanks for you help.

J

fiveyearplan

Hi and welcome! If you are selling at a reasonable market rate then there should be no repurcussions on you when you go BR. Does the sale price cover the mortgage? What is the sale price and what is your current outstanding mortgage?

jsmith13

Thanks for your reply. Yes the sale price does cover the mortage. Sale pice 250K, Mortgage is £161K.

J

debtinfo

hi jsmith, there is no problem doing this but for obvious reasons the OR will look at the transaction when you do go bankrupt. You need to make sure it is at market value (get a trusted valuation and keep a copy) and that it is at arms length (seperate solicitors that agree in writing that it is at arms length). The next thing is that it looks like you will have a substantial remainder after the mortgage has been paid. You need to make sure that nothing is done with this money that would be challanged the main ones being Transactions at undervalue (giving money away) and preferences (prefering one creditor over another rather than pro rata, particularly if some creditors are friend or family) keep records of what you do with the money.

fiveyearplan

With that kind of money couldn't you offer F&Fs to all your creditors starting at 20%? Many will bite your hand off. But only do this if you can pay all your creditors. Don't pay some and not others. How much is your total debt without the mortgage?

tomterm8

Erm, is the house in positive or negative equity? If the house is in negative equity you may not be able to sell it prior to BR anyway. If in positive equity, any proceed will be swallowed up by the BR estate... whereas, if you wait till BR is completed your parents might be able to buy it at a 'fast sale' valuation rather than at the full market price. It's worth talking to a national debt line advisor.

fiveyearplan

tomterm8 wrote: »

Erm, is the house in positive or negative equity? If the house is in negative equity you may not be able to sell it prior to BR anyway. Any proceed will be swallowed up by the BR estate.

See post 3.

tomterm8

fiveyearplan wrote: »

See post 3.

Oops, in that case it is worth trying to get a F&FS, as you suggested. I wonder if the OP a husband/wife, since if she/he does that will reduce the equity and may make them more willing to go for a deal.

To be honest, it all depends how large the debt is? Because if they know she has that much money they may be much less likely to do a deal.

fiveyearplan

How would they know how much money they had?

iamana1ias

fiveyearplan wrote: »

How would they know how much money they had?

Sale price would be shown on Land Registry website and amount outstanding on the mortgage on their credit report

fiveyearplan

But that doesn't tell anyone how much money they have left, how many other creditors they have etc. Not a very good indication.