Bankruptcy formula if they take the house..

TheWaltons_3

When you go Bankrupt.. they look at the house as an asset. What is the formula they use... i.e the mortgage is taken, then the equity is used... or the partner gets offered the other persons half..

How does it work?

sweeper12

Hi there

I've just been through this myself. They require info on what you owe on the mortgage and a valuation to determine the equity - I got a local estate agent to give me a written quote by telling them I was thinking of selling, that way you don't have to pay for a normal valuation. There was no equity at all in my property which I own jointly with my partner so I sold it for £1 to my son. You pay the OR about £250 and they instruct their own solicitor to do the change of deed, they recommend you get your own solicitor to check the document for you but my OR said it was ok if you decided not to do that if you couldn't afford it. Whatever the surplus equity, you are offered the chance to sell it to a family member or relative etc - just depends on what the surplus is and whether anyone can afford to do that. Once you are discharged, the share you have sold can be transferred back to you.

Good luck

rog2

The OR will look upon your 'BENEFICIAL INTEREST' in the equity on the house.
If the house is in joint ownership, then the formula will be:
1. Value of house (based on either local sales or valuation, which you can contest)
LESS
2. Current outstanding mortgage.
3. Balance of 1 - 2, divided by number of joint 'owners' to establish your BI.

The OR/Trustee will 'vest' his/her interest in your beneficial interest.
He/She will, initially, offer the other owners, or a trusted friend, the opportunity to make an offer to 'purchase' your beneficial interest. Whilst this offer should be based around the sum of your BI, the OR/Trustee will consider reasonable offers.
The OR/Trustee will inform the joint owner(s) of his/her intentions and his/her duty to realise your assetts.
He/She will also advise joint owner(s) that, with their permission, he will offer the house for sale, on the open market, and account to the joint owner(s) on completion of the sale.
The OR/Trustee can, as a last resort, take the joint owner(s) to court if they refuse to allow the sale.
The OR/Trustee MUST give a suitable time, usually a minimum of 12 months, in order to allow you time to find alternative accomodation.
The OR/Trustee has a maximum of three years, from the date of 'vesting' interest in the property, to deal with the matter. Otherwise the 'vested' interest reverts back to the bankrupt.

All of the above depends on the equity - if there is negative equity, then a partner, family member or close friend may 'purchase' the bankrupt's BI for a nominal sum, plus costs.

TheWaltons_3

rog2 wrote: »

The OR will look upon your 'BENEFICIAL INTEREST' in the equity on the house.
If the house is in joint ownership, then the formula will be:
1. Value of house (based on either local sales or valuation, which you can contest)
LESS
2. Current outstanding mortgage.
3. Balance of 1 - 2, divided by number of joint 'owners' to establish your BI.

The OR/Trustee will 'vest' his/her interest in your beneficial interest.
He/She will, initially, offer the other owners, or a trusted friend, the opportunity to make an offer to 'purchase' your beneficial interest. Whilst this offer should be based around the sum of your BI, the OR/Trustee will consider reasonable offers.
The OR/Trustee will inform the joint owner(s) of his/her intentions and his/her duty to realise your assetts.
He/She will also advise joint owner(s) that, with their permission, he will offer the house for sale, on the open market, and account to the joint owner(s) on completion of the sale.
The OR/Trustee can, as a last resort, take the joint owner(s) to court if they refuse to allow the sale.
The OR/Trustee MUST give a suitable time, usually a minimum of 12 months, in order to allow you time to find alternative accomodation.
The OR/Trustee has a maximum of three years, from the date of 'vesting' interest in the property, to deal with the matter. Otherwise the 'vested' interest reverts back to the bankrupt.

All of the above depends on the equity - if there is negative equity, then a partner, family member or close friend may 'purchase' the bankrupt's BI for a nominal sum, plus costs.

Ok..so for us..

House remortgaged and valued at £139 by Northern Rock - they happened to come the day we had the whole of one bedroom ceiling off (we were lowering it to add roofspace for a loft conversion) and the roof slates that needed repairing were showing!! I can't quite remember where we were up to with the extension.. but I know the roof/veluxes were in and the house was sealed again.

So, we owe £131k on the mortgage... have about £40k unsecured debt. House is in my husbands name only.

Does this look favourable for him to go bankrupt? It wouldn't make me a bankrupt, he can sign business over to me as he has nothing to do with it and I run it.. and saves us messing around with PayPlan!

Richard_S

TheWaltons wrote: »

Ok..so for us..

House remortgaged and valued at £139 by Northern Rock - they happened to come the day we had the whole of one bedroom ceiling off (we were lowering it to add roofspace for a loft conversion) and the roof slates that needed repairing were showing!! I can't quite remember where we were up to with the extension.. but I know the roof/veluxes were in and the house was sealed again.

So, we owe £131k on the mortgage... have about £40k unsecured debt. House is in my husbands name only.

Does this look favourable for him to go bankrupt? It wouldn't make me a bankrupt, he can sign business over to me as he has nothing to do with it and I run it.. and saves us messing around with PayPlan!

Hi TheWaltons,

There's more questions than answers here :eek:

1. Is the business a sole trader, partnership or Ltd Co. ?
2. Whose name is the unsecured debt in?
3. Why is the house in your husbands name only?
4. How long have you personally lived at the house and how long has your husband lived there?
5. Why do you run the business and your hubby have nothing to do with it?
6. Where do payplan feature in your finances?

I hope those questions don't sound intrusive, they're not meant to be, but it's impossible to give meaningful responses without having a reasonably clear picture of your circumstances.

Rog2 has outlined the principles of Beneficial Interest but there are all sorts of things that can affect that equation and impact on what is best for you in your current situation.

Regards

Richard

TheWaltons_3

Richard_S wrote: »

Hi TheWaltons,

There's more questions than answers here :eek:

1. Is the business a sole trader, partnership or Ltd Co. ?
2. Whose name is the unsecured debt in?
3. Why is the house in your husbands name only?
4. How long have you personally lived at the house and how long has your husband lived there?
5. Why do you run the business and your hubby have nothing to do with it?
6. Where do payplan feature in your finances?

I hope those questions don't sound intrusive, they're not meant to be, but it's impossible to give meaningful responses without having a reasonably clear picture of your circumstances.

Rog2 has outlined the principles of Beneficial Interest but there are all sorts of things that can affect that equation and impact on what is best for you in your current situation.

Regards

Richard

Hi

Nope.. not intrusive

1. Business sole trader - his name
2. Unsecured debt in his name
3. House in his name only as I met him a year after he bought it
4. I've lived here 4 years.. him 5
5. It's a business he can't possibly do anything with - it's my trade, not his
6. Payplan are doing a DMP for us.. although we haven't yet made first payment - due soon

Hope you can make more of that than I can!

Richard_S

TheWaltons wrote: »

Hi

Nope.. not intrusive

1. Business sole trader - his name
2. Unsecured debt in his name
3. House in his name only as I met him a year after he bought it
4. I've lived here 4 years.. him 5
5. It's a business he can't possibly do anything with - it's my trade, not his
6. Payplan are doing a DMP for us.. although we haven't yet made first payment - due soon

Hope you can make more of that than I can!

Hi TheWaltons,

Have you been in touch with one of the Debt Charities? CCCS, The National Debt Line and CAB all have professionally trained advisors who will advise you on what is in your best interests; their services are free and independent of any vested interest. If they do advise bankruptcy there'll be all the support and anecdotal advice you need on here.

If your husband does ultimately declare bankruptcy then the O.R will look to realise his share of the Equitable Interest, approximately £4,000, and you will be given the opportunity to purchase it. Given that he only lived in the house a year before you moved in the O.R would probably accept a 50/50 split of the E.I.

As for the business, if you sign it over to you, the O.R may try to attach some value to the transfer, whereas if you carry on as you are and just remove his name from any business stationery then chances are you won't have any problems; one of the Debt Charities will be able to help here.

Hope this helps,

Best regards

Richard