Can I safeguard my sister's stake in my house?

Johnpj

Ineedaname wrote: »

Please don't scaremonger. The OP has been given good advice thus far and the discussion has not been about protecting assets in the way you are suggesting.

I have just re-read this whole thread again, and realised that I was correct in my point. I beg to differ, I did NOT make a scaremonger comment.

The reason I say that is because of two details in the original post:
1) My creditors don't know about my investment property. The Land Registry site suggests that they could find out about it if they got a court order to search the records. If they do they could get a charge on it or bankrupt me. Either of these actions would scupper my sister's chances of getting her money back.
2) Rightly or wrongly I want to pay back my sister even if my other creditors never get a penny.

I understand the issue, and thought process behind it, but my comment is very valid. I am making a technial point, not a moral one by the way.

On a further point the poster states later in the thread that they might sell the property to his sister for a market value. It is imortant to note that accountants (which really is what the insolvency service is) look at the asset as a whole and how best to maximise return for creditors. They have very little time for family connections. Selling to his sister at todays market value, might not be in the best interests of his creditors, as it might be worth keeping the property for a number of years, before selling it. It is quite common in bankruptcy for a house owned by the bankrupt, either outright or more likely mortgaged is not sold straight away. This area is very tricky and even though something seems right and just might not be the same way an acccountant and hence the insolvency service sees it.

To be constructive - I think your sister needs to take legal advise on this specific matter, along the lines mentioned above. She should do this PRIOR to you giving her power of attorney, and as part of her legal advice for taking said powers.

HOWEVER - in order for your sister to get the right advice, and protect both herself and yourself, she needs to let the legal advisor know the FULL facts, as without them the advice could very well be seriously wrong.

I know I am a new poster, and I am honestly not trying to be a pain or start arguments, just helpful based on my personal experience of bankruptcy.

Crumbum

Thanks, that's all good advice and I appreciate it. Even if it may turn out to be slightly incorrect or inappropriate it still needs to be looked into.

Re the council tax arrears, the National Debtline advised me to start paying 3.40 per week and ask for the debt to be taken back from the bailiffs. 3.40 pw is the maximum amount of my 65 pw benefits which the council would be able to siphon off if they took me to court, so with luck this could forestall legal action.

They also advised me to ask for the council's policy on setting the bailiffs on vulnerable people, and to complain to the local govt ombudsman if I'm bullied or threatened.

Re my bank debts the debtline advised I should offer one pound a month and no more, even if the offer is repeatedly rejected. One pound a month doesn't sound a lot, but if I pay it to ten creditors and add in 3.40 per week to the council my monthly income shrinks from 281 to 256.

Johnpj

Firstly well done for talking to the debt advice lines, that is a huge step forward, and hopefully you will feel better for it.

The advice is as I expected and sort of goes along the lines of you cannot get blood out of a stone.

You might find when you approach your creditors that they ask you to fill in an income and expenditure form. These might also ask about your "other incomes", and you will then have to make your own moral mind up on letting them know about your property. You know you should but life is a risk and you need to do what you feel comfortable with.

In my situation all of my creditors were prepared to wait, but one decided with no evidence that I might have hidden assets and pushed the bankruptcy button. Quite good for me, as it "wiped" out my debt, although morally wrong. I even gave oral evidence in court under oath prior to them doing is into my means and assets, but they chose to ignore it. They then found out the hard way that I had nothing and they lost everything, in effect. I felt sorry for the other creditors who were willing to wait until I was able to earn again.

debtinfo

Johnpj wrote: »

Selling to his sister at todays market value, might not be in the best interests of his creditors, as it might be worth keeping the property for a number of years, before selling it. It is quite common in bankruptcy for a house owned by the bankrupt, either outright or more likely mortgaged is not sold straight away. This area is very tricky and even though something seems right and just might not be the same way an acccountant and hence the insolvency service sees it.

I see that you are trying to help and you are vaguely in the right area but you are missing a great deal of knowledge.

The bankrupt has every right up until the bankruptcy to sell any asset that they hold to anybody as long as they do so for a market value and at arms length (best to have seperate solicitors on both sides)

The part about the OR deciding to keep the property for a period of time to see if it rises in value only applies once the asset has vested with them as trustee

Johnpj

debtinfo wrote: »

I see that you are trying to help and you are vaguely in the right area but you are missing a great deal of knowledge.

The bankrupt has every right up until the bankruptcy to sell any asset that they hold to anybody as long as they do so for a market value and at arms length (best to have seperate solicitors on both sides)

The part about the OR deciding to keep the property for a period of time to see if it rises in value only applies once the asset has vested with them as trustee

Yes, but I am also trying to provide simple advice. My knowledge it much deeper than I would want to splash over here, which is often too much for the average person to cope with. But I do take your point.

However I not agree with your first point, as I hope you only agree it is only half the story.

Whilst anybody has the right to do anything with their assets, and restrictions only apply once a court order has been made (ie bankruptcy), this is where only half the story comes in.

If you dispose of assets knowing, or should have known you were insolvent, and then you subsequently actually become insolvent, the trustee in bankruptcy usually the Official Receiver can reverse transactions which in their opinion were not equitable to all creditors. This is where a bankruptcy restriction order or undertaking comes in, in terms of the trustee taking the view you knew the effects of what you were doing.

Therefore saying that they can sell assets at market value is fine is half correct, because you have to prove / hope that the trustee has the same opinion. For example it depends how you value the property, get one opinion? are they suitably qualified? it is all subjective I am afraid to say.

The real issue is that if you know you are insolvent, or should have known, then you should seek professional advice from an insolvency practitioner or professional debt advice service before disposing of assets.

Further time is a key thing here. If you sell assets a year before you file for bankruptcy that is different from someone who might sell the asset a week before they file.

debtinfo

that is spliting at hairs, the important thing and what the law says is that it should be sold at market value, in every situation there is something that can be subjective, in practice for a house a simple valuation from a chartered surveyor is sufficient.

Johnpj

In most cases I agree it is spliting hairs, but it becomes even more under the spotlight if the person is a friend, and even more if its family.

You probably know as much as I do that many people use the "law" to dispose of assets to family only to have a side agreement beind the scenes. The trustee knows this, and if they smell a rat will apply to the court for a BRO if the bankrupt fails to take a BRU.

The key issue is if you are shortly about to go bankrupt, then you should seek advice from say an insolvency pracitioner and selling anything to family should be done with the utmost caution.

Because of a few people who try and use the law to hide behind, you could be dragged into a BRO/BRU discussion and all the heartache even if you have done nothing wrong. At a time when bankruptcy should free you from the burden and worries of debt, it might cause even more.

debtinfo

A BRO/BRU is always based on solid evidence, they dont just make them because they think something might be up. as long as you are selling at market rate and arms length then you have nothing to be worried about. You only need to worry if you are actually doing something underhand

Johnpj

debtinfo wrote: »

A BRO/BRU is always based on solid evidence, they dont just make them because they think something might be up. as long as you are selling at market rate and arms length then you have nothing to be worried about. You only need to worry if you are actually doing something underhand

I agree and that is why I said

Because of a few people who try and use the law to hide behind, you could be dragged into a BRO/BRU discussion and all the heartache even if you have done nothing wrong.

Not only have I been involved in my own personally bankruptcy for which I learnt quite a lot, I have been involved on the other side a number of times. As in companies taking action against insolvent parties and who we believed were handling assets wrongly in the immediate lead up to bankruptcy. The result is a lot of defending and paperwork for the insolvent party, who gets dragged into more heartache.

I know many insolvency practioners who would generally advise aginst disposing of any assets ONCE you know you are insolvent.

The issue with this poster is that they clearly KNOW they are insolvent, and hence things become much more open to interpretation post bankruptcy proceedings.

The more appropriate acton for this situation would be for the sister to ensure she has her interest properly registered than trying to buy the house pre bankruptcy. As you well know the trustee will generally allow family to buy interests in property post bankruptcy, as long as the bulk of creditors agree.