Bankruptcy & House

Wangeye08

Hi all,

I've been trying to get out of debt for some time..I have approx 40k of debt. I've decided that bankruptcy is going to be the best route.

I don't really have anything in the way of assets. However, a couple of years ago we purchased a house. It is in my wife's name only (mainly because I was self employed with no accounts at the time)

At the time the mortgage company made me signs a document to say that I agreed to have no financial interest in the property. We planned on adding me t o the mortgage later if required.

However, I have been paying toward the mortgage. I'm concerned that if I go bankrupt, it could have an effect on the house.

Any thoughts on this? I'm probably worrying unnecessarily but don't want to get caught out!

Flyright

It sounds as if you may have a beneficial interest in the property. Obviously the OR will look closely at the property situation (is there any equity in it?). Did you provide any funds towards the deposit?

Bumfluff

No, I didn't. There is equity in the property. Outstanding mortgage is approx £100k, recently valued at £171k.

Wangeye08

Oh weird...just followed the notification link in mail on my iPad and it logged me in with an old username! Sorted it now....the above post is from me

debt_doctor

Hi,


How was the deposit raised and who by?
Did you sell anything or give anything to go towards the deposit?


DD

Bumfluff

Im not sure what's happening with my username...after several failed login attempts, I can now only use this one!

I think I'll have to email admin...

Anyway back to the house. The deposit was "gifted" to my wife by the in laws. This is what the mortgage company requested an paperwork was signed to this effect so they had no interest in the property.

In real terms, my in laws remortgaged their house and gave her in the region of £45k for the deposit. We are repaying their monthly mortgage fees directly back to my in laws. So in effect, we/she has a family loan with them.

Bumfluff

In addition, I did not contribute to the deposit in any way. This was all done financially without any input from me

Keep_pedalling

If you mortgage company find out that your inlaws gift was really a loan then your house will be under serious threat.

Can you inlaws afford to make their own mortgage payments? If you cut out those repayments could you then avoid bankruptcy?

Bumfluff

My in laws have since paid off their remortgage/our loan with a recent inheritance. So technically, yes they could afford it.

Could I morally ask them to take a £40 odd k hit so my debts can be paid? I just don't think I can do that.

I can see your point here though and it leaves me in a moral dilemma.

I'm not trying to avoid paying my debt, although I feel that there is an element of that with anyone declaring bankruptcy.

In hindsight, I should've declared bankruptcy before my wife took out a mortgage..but it's too late for that.

What I am trying to do is resolve my debt without putting our family home at risk and therefore putting myself, wife and kids out on the street

Shortie

Hi Bumfluff, I think you were trying to log in wih a small b to your account - 'bumfluff' with a small b has been owned by someone I know who got an email about failed login attempts (which now makes sense seeing this)

I think you can find your old account if it's not this one by popping your email address in and asking it to send you your email address

Just thought I'd mention it in case you were still wondering why you couldn't log in with a small b :-)

debt_doctor

In cases where the bankrupt does not have legal title to the house, I have never seen any OR / IP take any recovery action against the non bankrupts property - even in cases where the property was mortgage free or the bankrupt had paid towards the mortgage.
However, you say the deposit was gifted - but then it is being paid back - so the deposit was a loan.
The crucial thing is; Was it loaned to their daughter, or to both of you? If both of you then, then as soon as the money is provided it becomes the property of both of you - so in this scenario, you paid your cash towards the deposit at a time that you were insolvent.
It could be said by an IP that the land registry arrangement was done to put your deposit beyond reach of the creditors.
Crucial things; Who was the deposit loaned to? What does any paperwork say? Who is making the proxy payments to the in-laws re mortgage?
DD