Sale of house before bankruptcy??

welshlass34

Hi all need some help please, due to my IVA failing i am in the process of getting a valuation done on my property and hopefully if there is enough equity hope to offer my creditors a full and final payment. However if there isn't as much equity as I require I will have to go bankrupt. If bankruptcy is the only option can I still sell my house before filing and keep enough from the proceeds to pay bankruptcy fees and the money for a bond and rent for a new place to live. I also owe my mother in law 3000 and would like to clear that before bankruptcy. Any advice greatfully received.

fermi

welshlass34 wrote: »

I also owe my mother in law 3000 and would like to clear that before bankruptcy.

Not sure about the rest as I've not researched the whole property thing, but on this things are clear.

One of things that the OR will class as 'misconduct' is preferential treatment of creditors, irrespective of whether they are friends/family or a bank etc.
Firstly, the OR would be able to demand the money back to split fairly between your creditors. Secondly, the OR could consider this as contributing to grounds for a BRU/BRO.

The best thing to do is come to a private agreement with your mother in law that you will pay her the money once you are discharged.

Hopefully, those with more knowledge on the property side will post soon...

Richard_S

welshlass34 wrote: »

Hi all need some help please, due to my IVA failing i am in the process of getting a valuation done on my property and hopefully if there is enough equity hope to offer my creditors a full and final payment. However if there isn't as much equity as I require I will have to go bankrupt. If bankruptcy is the only option can I still sell my house before filing and keep enough from the proceeds to pay bankruptcy fees and the money for a bond and rent for a new place to live. I also owe my mother in law 3000 and would like to clear that before bankruptcy. Any advice greatfully received.

Hi welshlass,

Have you contacted one of the debt charities? CCCS, CAB, National Debt Line all offer free professional advice and will be able to detail the various options open to you. There is no problem with selling your house prior to declaring bankruptcy but you will have to account for the net sale proceeds, and if you repay your MIL you will be showing preference to creditors which will be frowned upon.

Are you sure that selling your house is the best option? If there's little or no equity available you could well be better off staying where you are. You haven't really given a lot of detail so it's difficult to make any really constructive observations with the exception of contacting one of the debt charities as a matter of urgency.

Best regards

Richard

gotnomoneynomore

If only you are going bankrupt, you could pay your mother in law back from your wifes half of the proceeds from the house - should be untouchable then. Make sure you can account for your half though otherwise they may say that you paid her and not your wife.

Jonto_3

welshlass34 wrote: »

Hi all need some help please, due to my IVA failing i am in the process of getting a valuation done on my property and hopefully if there is enough equity hope to offer my creditors a full and final payment. However if there isn't as much equity as I require I will have to go bankrupt. If bankruptcy is the only option can I still sell my house before filing and keep enough from the proceeds to pay bankruptcy fees and the money for a bond and rent for a new place to live. I also owe my mother in law 3000 and would like to clear that before bankruptcy. Any advice greatfully received.

They first question i would ask myself is why the hell would you want to pay your mother in law back !! Anyway, if you did it would be classed as a preferential payment and would be recovered by an IP. The likelyhood of them doing so for £3,000 if she wouldn't give it them back after they asked is something else though.

rog2

Hi Welshlass - I see absolutely NO problem in you selling your house in order to attempt to pay off your debts. Even in the event that you did have to opt for bankruptcy in the final analysis if you were unable to agree full & final settlements with your creditors. In my opinion, the OR would see that you have been making every effort to pay your debts and that the act of selling your house was not done for personal gain, in the knowledge that you would be seeking the protection of bankruptcy.
The only problem that I could see would be if you were to pay off your mother-in-law in 'preference' to other creditors. Do you have a written agreement regarding the money that you owe your mother-in-law? If not, then this may not be considered a legal debt by the court.