bankrupcy and house

hellvelyn

Hi I am looking at options to sort out a potential issue with my father. We may house share (the house is big enough to split, and have spoken to a solicitor about this, complicated but is possible) apart from the house share issues we are looking at protection of the assets from possible bankrupcy. the house will still be one dwelling with doors not walls so council tax not an issue.

we would buy a half share of the house for slightly reduced cost and be gifted the rest of the half share. he would gift the rest of his share to my mother. comes off the mortgage and deeds, he would probably have a beneficial interest in the property, not sure how this would work.

His business is ok but struggling and finances should be okish but just looking at potential issues, if he can 'survive' for 2 years and seeing that he hasnt really 'hidden' assets as we have bought a share and paid off debt with it, would the house be protected after the 2 year period if he is off the deeds and mortgage or could an OR reverse this after this time. There would be no secured debt on the house only on a sole trade business. what about beneficial interest as he is still living there.

if bankrupcy occurs, what would happen regarding my mothers share and ours, would they only be able to take a smaller proportion of the house seeing that we have bought a share and the rest is my mothers share anyway. the amounts we are talking about is an 800K house 50/50 share with my mother. I am aware that the house would have to be sold in this event depending on protection and when/if it occurs but would they be only able to take a smaller share in this case or none at all if over 2 years???

just checking options.

the solicitor suggested 2 years before it is protected but how protected are we talking here??
thanks

coolcait

I'm not sure if your father solely owns the property at the moment, or if is jointly owned with your mother.

The following comments are based on Scottish bankruptcy law. There may be some differences from English bankruptcy law.

Your father is already in financial difficulties. He is proposing to give away his share of the property under value.

He will transfer part of his share of the property to his son/daughter and daughter/son-in-law; the other half will be transferred to his wife. All of these people are 'associates', as defined by the bankruptcy legislation.

So, a trustee could seek to overturn the transfer up to five years after the date it has become effective.

If you weren't 'associates' then the cut off date would be two years from the date the transfer became effective.