Getting house valuations

FixitM

Thank you. So what exactly is 'beneficial interest' then? I assumed it was whatever equity was in your house. What happens if still in negative equity in 2 years and 3 months time? Would you just get to keep the house? And/ or would you be able to have someone buy the beneficial interest at that point?

Thank you.

Cobalt77

FixitM wrote: »

Thank you. So what exactly is 'beneficial interest' then? I assumed it was whatever equity was in your house.

Think of 'beneficial interest' as meaning legal ownership. Once you are BR, the OR owns your share of your property - the 'beneficial interest'.

As for your other questions, here are some extracts from National Debtline:

With jointly owned property the official receiver or trustee is usually only entitled to the bankrupt person’s share of the equity (that is their ‘beneficial interest’).

It may be possible for the joint owner or family and friends to make an offer to the official receiver or trustee to buy out your share of the equity. This can be particularly helpful if there is little or no equity.

What happens after my bankruptcy order is made?

The official receiver will look at each property classed as your ‘family home’ to see how much your beneficial interest is worth. The following points apply to each of these properties.

- If there is negative equity, or your beneficial interest is estimated at less than £1,000, the value of your beneficial interest will be reviewed two years and three months after you went bankrupt. In some circumstances, the official receiver may allow your beneficial interest to pass back to you before two years and three months have passed. Contact us for advice.

- If your beneficial interest is estimated at more than £1,000, but is still quite low, it may be possible for a third party (such as a joint owner, family member or friend) to buy your beneficial interest. See the later section Is there a special scheme that can be used to buy back my beneficial interest?. If this does not happen, a separate insolvency practitioner may be appointed as trustee. The property can be dealt with at any time within three years of you going bankrupt, even if this is before the two years and three months stage.

Link: https://www.nationaldebtline.org/EW/factsheets/Pages/bankruptcy/howtogobankrupt.aspx

So, as you are currently in a reasonable amount of negative equity, there are two possibilities:

1. The OR will get your home revalued in 27 months' time. If it has gone up in value and there is then equity, the OR will want to get their money back by potentially selling it, or
2. The OR may accept a nominal payment of £1,000 (from partner/friend/family member) to buy out their interests today. So, the OR gets £1K while you are BR, but you get full ownership of your house back and the OR/creditors cannot touch it in the future.

Although you are currently in negative equity, it would give you far more peace of mind than just leaving it for 27 months and hoping house prices don't rise too much. But, as I mentioned, it's totally down to your OR whether they would be prepared to accept £1,000, or would prefer to wait for a couple of years to see what happens.

HTH

debt_doctor

Cobalt77 wrote: »

FixitM,

I seem to recall you can immediately make an offer to "buy out" the OR's interest if you are in negative equity, although it's totally at the OR's discretion.

Hopefully, Fermi or DD will be able to confirm whether this is the case.

Yes, that's true - you can make an offer straight away (£1000 is the most quoted figure) to get re vesting of the property back to the bankrupt early.
This is a standard practice to be considered by the OR if offered - but ultimately the OR's call on whether to accept or not.
DD

FixitM

Thank you so much for your replies, and the information. I wonder if the situation will be confused more by the fact my husband has get to go through with his bankruptcy? Where does this leave us? Do we need to wait until his bankruptcy to make the offer to the OR, or would the house be safe if anyone were able to do it at this stage (before his bankruptcy)?


Thanks in advance.

Cobalt77

Hi FixitM,

Even though you may both be ultimately going BR, only YOU are BR at the moment (Bankruptcy is like pregnancy, you are either BR or you aren't, lol)

Do you have family/friends who could get £1,000 together without over-stretching themselves? If so, it could be worth making an offer to the OR very early on to see if they would accept it (if they won't, at least you know)

If your husband intends to go BR in the future, make 100% SURE the beneficial interest is transferred to another family member or friend you trust and NOT HIM.

However, two important caveats:

1. If your husband plans on going BR himself in the very near future, you will likely need another £1,000 to buy out his interest from the OR (best case) or
2. His OR may not agree to selling your husband's beneficial interest at all, in which case you are down £1,000 (worst case)

The only other option is to sit on your hands for 27 months after your husband has gone BR and hope your property is still in negative equity, in which case you may be allowed to keep it.

HTH

tigerfeet2006

Also are you on an interest only mortgage at the moment?