Beware - they never forget.

davelacey

Hi Richard.
Yes I realise the technical reasons as to why.
I simply wonder if that is a plausible excuse in law. Is the I.S. so understaffed that they couldn't have done this earlier - instead of people being lulled into a false sense of security, and then being "bitten on the bum" years later?
I'm not actually blaming the I.S. per se - they have to operate under laws and guidelines set by Parliament.

Although it has digressed somewhat, the original purpose of this thread was to act as a warning to other folks who owned their own property, either with or without a mortgage.

If you own property and go bankrupt - and the OR doesn't take any action on it immediately - rest assured - he will eventually.

Not good reading, I know, but people should know the truth.

rog2

davelacey wrote: »

Although it has digressed somewhat, the original purpose of this thread was to act as a warning to other folks who owned their own property, either with or without a mortgage.

If you own property and go bankrupt - and the OR doesn't take any action on it immediately - rest assured - he will eventually.

It CERTAINLY has gotten me to raise a few questions Dave - thanks for starting it. :beer:

macsacel

davelacey wrote: »

Hi Richard.
Yes I realise the technical reasons as to why.
I simply wonder if that is a plausible excuse in law. Is the I.S. so understaffed that they couldn't have done this earlier - instead of people being lulled into a false sense of security, and then being "bitten on the bum" years later?
I'm not actually blaming the I.S. per se - they have to operate under laws and guidelines set by Parliament.

Although it has digressed somewhat, the original purpose of this thread was to act as a warning to other folks who owned their own property, either with or without a mortgage.

If you own property and go bankrupt - and the OR doesn't take any action on it immediately - rest assured - he will eventually.

Not good reading, I know, but people should know the truth.

But is this where the new 3 year rule comes in? i.e. They have to register an interest within the 3 year anniversary of the bankruptcy date or 1st of April 2007whichever is later.

I was BR'd in June 2003, The OR has just appointed a trustee and has registered an interest in the house I owned at the time, and my ex wifes house, which she bought and owns outright after I gave her my share of our then home in a divorce settlement in 2000.

I take it they are going through everyone who this applies too an appointing trustees at pace to stop people falling through their net.

davelacey

macsacel wrote: »

But is this where the new 3 year rule comes in? i.e. They have to register an interest within the 3 year anniversary of the bankruptcy date or 1st of April 2007whichever is later.

I was BR'd in June 2003, The OR has just appointed a trustee and has registered an interest in the house I owned at the time, and my ex wifes house, which she bought and owns outright after I gave her my share of our then home in a divorce settlement in 2000.

I take it they are going through everyone who this applies too an appointing trustees at pace to stop people falling through their net.

Yes, you're absolutely correct. The people it's going to hit hardest are those in similar circumstances to myself, who went BR a long time ago. I first became aware of OR proceedings a week ago - that's 11 years after my BR and 9 years after my discharge.
From talking to a few people at the OR in the last few days, I know they're working at full capacity to ensure that no-one escapes their attention.

I asked them when the cut-off date was - i.e. if you went bankrupt before such a date, then you may be "let off". They replied that "as far as they were aware - there wasn't one."

So hypothetically, imagine someone who declared BR 20 years ago, suddenly receiving a "dear John" in the post. :eek:

macsacel

Exactly, that's why people should be wary of bankruptcy. It's not a simple matter of "there you go you are now debt free". The OR will do all in their powers to get back the money one way or another.

davelacey

macsacel wrote: »

Exactly, that's why people should be wary of bankruptcy. It's not a simple matter of "there you go you are now debt free". The OR will do all in their powers to get back the money one way or another.

What truly annoys me about this new act is this.

Ok - the OR has 3 years to deal with a BRs' estate from the date of bankruptcy.
So if he then applies for a charge after 2 years and 364 days - he then has a further 12 years to deal with the case.

See the last paragraph in the opening post.

Richard_S

davelacey wrote: »

Is the I.S. so understaffed that they couldn't have done this earlier - instead of people being lulled into a false sense of security, and then being "bitten on the bum" years later?
I'm not actually blaming the I.S. per se - they have to operate under laws and guidelines set by Parliament.

Although it has digressed somewhat, the original purpose of this thread was to act as a warning to other folks who owned their own property, either with or without a mortgage.

Hi Dave,

I've had a number of encounters over the years relating to security on property and other assets so it comes as no surprise to me that the O.R will bide their time waiting for an asset to appreciate before they exercise their right to seize it. Secured lenders have I think 10 years to exercise their right to reposses a property and I know of a couple of occasions when the lender has waited until the "11th hour" to commence repossession proceedings complete with interest at 8% and horrendous legal fees and charges.

It seems as though people who went bankrupt before the laws were reformed in 2004 have had a particularly rough ride compared to a bankrupt since that date who has been able to purchase the O.R's equitable interest for a nominal £1 if the equity is negligible or negative. There are still problems though for people who have equity in their homes because again, if the bankrupt won't sell and a judge won't authorise a repossession order, then the O.R will apply for a charge against the property that is basically a "time bomb" waiting to go off.

You were absolutely right in your initial post; if you declare bky and you have assets it's not going to be an easy ride and can come back to haunt you. I'll rephrase that "will come back to haunt you".
Regards

Richard

davelacey

Richard_S wrote: »

There are still problems though for people who have equity in their homes because again, if the bankrupt won't sell and a judge won't authorise a repossession order, then the O.R will apply for a charge against the property that is basically a "time bomb" waiting to go off.

You were absolutely right in your initial post; if you declare bky and you have assets it's not going to be an easy ride and can come back to haunt you.

Regards

Richard

Too true, Richard.

With an 8% per annum fuse attached.

who WRITES these laws? Noddy???? :rolleyes:

macsacel

davelacey wrote: »

What truly annoys me about this new act is this.

Ok - the OR has 3 years to deal with a BRs' estate from the date of bankruptcy.
So if he then applies for a charge after 2 years and 364 days - he then has a further 12 years to deal with the case.

See the last paragraph in the opening post.

Thats what they appear to have done with me. Written me a letter listing what they are interested in 6 weeks before the deadline. Hey presto, they've given themselves a 12 year extension.

Erikin_2

You guys have no doubt had a rough deal because of going bankrupt pre 2004. Thankfully, the benefit post 2004 is the period of trustee interest has been capped at 3 years so your experience won’t repeat itself.

So just to put another side on things for those looking in and thinking it will be hell going bankrupt with equity in property – need not be.

What happens when you go bankrupt the OR will work out the beneficial interest in the property.

He will obtain settlement figures from the mortgage company and / or charges, say, for example

a) Mortgage company settlement i.e. to fully pay it off in a lump sum: £110,000.

b) Charge on property i.e. borrowed say to improve property: £25,000.

So total sum needed to fully discharge mortgage / charge = £135,000.

Then obtain a proper valuation of the house say: £150,000.

That leaves equity in the property to the value of £15,000.

Therefore in a normal case, you are the bankrupt but your wife is not, the OR would seek the beneficial interest of £7,500, i.e. half of the equity.

This process can be initiated by the wife, mother, parent at early stage of bankruptcy. Pay the OR the £7,500 which would settle his interest and the property would no longer be part of the bankruptcy estate. There would be additional legal fees which are not large.

If you don’t initiate the process at the start the matter just goes into sleeper mode to be dealt with later.

Thinking from the trustee point of view, say you went bankrupt with debts of £80,000 he can play the waiting game, particularly over the past few years, because house prices have appreciated and nearer £80,000 is better than £7,500 for him / creditors.

Say the house was in negative equity the wife / parents could purchase the bankruptcy interest for a nominal £1 + plus legal fee. The property may be in negative equity now but if house prices appreciate the trustee will wait his opportunity. But again there is also the chance of depreciation.

Good advice can make all the difference.