Bankruptcy & the wife's house

ShropshireDavid

I petitioned successfully for bankruptcy today.

The wife is worried about her house. She owns it entirely and bought it before we met. She has always paid the mortgage on it either from her own salary or from her income from renting it out (when we lived elsewhere). She has also always paid all the bills such as repairs & council tax. We moved back in 4 months ago after her tenant left.

My guess is that this ought to mean that the OR/liquidator can't touch it as I have no financial interest in it. But my worry, and hers, is that the OR will say that I do have an interest in her house: that I gave her a 'benefit in kind' by paying some bills like food, diesel & kids clothes etc etc and that because I did so I freed her up from paying these bills so she could pay her mortgage. That is, they would say, in effect, that I made an indirect contribution to her mortgage so they can grab a 4 month share of her house.

I know this type of argument is sometimes seen in property law & divorce. As I understand it in those areas the argument sometimes works (& sometimes doesn't).

Has anyone seen this sort of thing from an OR?

fermi

There has been that kind of argument, but it is a difficult one for the OR/trustee to pursue or prove.

In fact their guidelines state that:

Beneficial interest will follow legal interest unless the contrary can be proved

It will be difficult for the non legal owner of a property to rebut the presumption of equity following ownership (see paragraph 31.3.130) unless they have made some financial contribution to the property.

Fulfilment of domestic duties alone will not be sufficient to demonstrate a beneficial interest URL="http://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part3/part4/part%204%20notes.htm#44"]note 44[/URL. Funding substantial improvements to the property usually will be sufficient URL="http://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part3/part4/part%204%20notes.htm#25"]note 25[/URL, and the amount of the interest will generally relate to the financial value of the improvement URL="http://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part3/part4/part%204%20notes.htm#45"]note 45[/URL.

longtermplanner

If it was rented out up to 4 months ago, then the OR isn't going to waste any time on this one. A 50% share of the equity she has acquired by paying the mortgage for 4 months is going to be sweet FA.

ShropshireDavid

Yes I'd think that but I just don't know how petty they'll be.

dojoman

ShropshireDavid wrote: »

Yes I'd think that but I just don't know how petty they'll be.

The OR is not petty, they are someone just doing their job.