Bankrupt by Tax Bill Charges - losing my home!

fiona1125

Hi All,

I am posting this for my partner as he is so depressed and stressed at the moment its a struggle to help him.

A few years ago he had a tax bill for £5,000 that he never paid straight away, stupid i know but the end of that year he started refusing work every now and again because the company who gives him work put him under so much stress. Being a very silly person he did not pay the tax bill but heard nothing from them chasing, then the next tax bill came the next year and he ran at a small loss so there was no bill and no letters.

A year ago a lady arrived at our house to say that there was a £16k bill outstanding and that he needed to pay it now. He said he couldn't and had to ring a number, he tried to set up a payment plan but they refused as they wanted it paid within the year. He couldn't pay anymore than what he offered as we were still trying to repay our mortgage arrears.

A few months ago he received a stat demand so we contacted them again to ask about a payment plan, still a no! they want it paid within the year. We tried to set up an IVA and get approved by all our creditors apart from the HMRC who refused.

They are now filing for bankruptcy.....please bear in mind that the tax bill was £5,000 and the charges are £11,000 - i know he needs to be punished but £11k in charges seems so bad especially when we have tried to arrange payments. I have appealed the charges but i'm getting nowhere.

Anyway, we have approx £9,000 equity and its joint owned.
We have tried so hard to save our home from repossession and are now nearing the end of the arrears to be faced with bankruptcy and losing our home. We have 3 children and it scares me to the point i am crying every night and occasionally at work, my partner is so depressed. We have no assets only a £600 van and bad credit and no family.



What would our position be on keeping our home, i have read that i could buy him out but i don't understand how it works. Would i need to remortgage or does that mean i pay to the OR his share so £4,500.

I am so confused and worried.

Please help and be gentle.

sourcrates

Hi,

Thats a terrible situation to be in.

Unfortunately HMRC have wide and ranging powers for this kind of thing.

Have you sought any professional advice as yet ?

National Debtline would be the place to start, as you really need to speak to someone who knows there stuff, on your legal position.

I would try them first.

fiona1125

Thanks for you reply.
We tried advice from both Stepchange and Payplan and started to put an IVA in place, we got all the way to the end and HMRC ruined it for us.

Both, Stepchange and Payplan have said maybe it would be worth going bankrupt.

We cannot lose our home, we really can't. I am so scared.
I don't understand why HMRC would pursue bankruptcy knowing they are not going to really see a return.

I need to know if there is a way we can keep our home.

TBagpuss

If your partner is made bankrupt then normally it would be possible for you to by out his share of your home - so if the equity is £9K you would buy his share from his OR for £4,500, if you are in a position to raise that.

Have you spoken to Stepchange about the potential for him to become bankrupt and you not to do so? Do you have other debts of your own, or in joint names?

A major issue is that if you have joint debts and he goes bankrupt, you remain liable for the full amounts.

sourcrates

Take a look here :

http://debtcamel.co.uk/debt-options/bankruptcy/

Basically if the house is worth more than your outstanding mortgage, the OR may want to sell it.

As said above, you can buy out his share of the equity.

National_Debtline

Hi Fiona


I am sorry to hear about your predicament.


HMRC are one of the more aggressive creditors out there, and commonly reject IVA proposals. They are known to pursue bankruptcy proceedings even where that may not be the most profitable choice for them.


Despite all that, there may still be things he/you can do, as suggested by others above. However I would strongly recommend that you call us for a chat to get more detailed advice than is possible here.


Dennis
@natdebtline

safc88

are your children under the age of 18? If so you will get an automatic period of grace for 12 months from the date that your husband goes bankrupt before his Trustee would look to commence proceedings to take possession of the property (the court will always allow this).


If your property is in a negative equity position then it is most likely that the OR will disclaim it, if there is equity then you should get first refusal of buying his share. Bear in mind whilst doing this that any offer you make should be heavily discounted due to the fact that by doing a deal his Trustee will save on the costs/legal fees of taking repossession action. For example if his 50% share of the equity is £4,500 i'd be looking to offer say £2,000 as it will save on costs for them.

debt_doctor

Hi,


If his equity is only worth £4.5k (less sale costs) then there certainly is not enough money to attract an IP.
The OR has up to 3 years to realise an interest in the family home. Currently for any bankrupts share that is worth less than £10k then it would be a charging order rather than a sale of he property.
The charge would sit there until you decided to sell - but would attract statutory interest at 8%.
Also, as above posters have said - if money is available from someone to buy the beneficial interest then I would start at £1.5k / 2k.
DD

Former_StepChange_Richard

[FONT=&quot]Hi there [/FONT]

[FONT=&quot]Just spotted your post and thought I’d add to it as the process of buying someones interest in bankruptcy can be quite complicated. [/FONT][FONT=&quot]
[/FONT]
[FONT=&quot]It’s important that you prepare carefully for this situation as there’s a lot to consider. I would suggest calling and speaking with one of our advisor who can explain and answer any questions (there is a lot to take in as you’ll see below). I’ll do my best to explain what it requires here though.
[/FONT]
[FONT=&quot]Before the bankruptcy your partner should speak to the mortgage company to confirm they’ll agree to the sale of his interest and how this will affect the ongoing mortgage.[/FONT]

[FONT=&quot]After declaring bankruptcy, you and your partner will speak with the OR. It’s likely the OR will be set as the trustee for your property given the equity available. The OR may appoint an insolvency practitioner as trustee to realise the beneficial interest, but in practice it’s unlikely an IP would take on the case unless there was significantly more equity than this available.[/FONT]

[FONT=&quot]After explaining your intentions to purchase your partner’s interest, you will need to pay the following costs: [/FONT]

• [FONT=&quot]Legal fees – this is a fixed £211 if the OR is the trustee but more if an IP has been appointed as trustee[/FONT]
• [FONT=&quot]Costs of a solicitor or licensed conveyancer to act for the third party (if necessary)
  [/FONT]
• [FONT=&quot]Costs of an independent valuation[/FONT]
• [FONT=&quot]Agreed purchase price of your partner’s beneficial interest[/FONT]

[FONT=&quot]If the OR is the trustee you may be able to use the Insolvency Service’s property conveyancing scheme for the transfer. If this isn’t possible, you will need to get advice on this.
[/FONT]
[FONT=&quot]There are several other points where you may need to get legal advice to help you through this process too: [/FONT]

• [FONT=&quot]Your partner may need legal advice to register a ‘life interest’ in the property with the Land Registry confirming that they intend to stay in the property.[/FONT]
• [FONT=&quot]If your partner wants the ownership (legal title) of the property to return back to them after the bankruptcy, they’ll need to get legal advice to draw up a written declaration or formal trust deed confirming this.[/FONT]
• [FONT=&quot]Legal title can only revert back to your partner after discharge or after an income payment agreement or order has been completed. Your partner will need legal advice on this.
  [/FONT]

[FONT=&quot]If you’re in any doubt, please do call so we can discuss this with you. [/FONT]

[FONT=&quot]I hope this helps. [/FONT]

[FONT=&quot]Richard[/FONT]

Mouse007

Turn round and look at this as an opportunity.

Currently your partner owes £16,000 to the tax man. After bankruptcy you could pay as little as £1,500 to £2,000 to secure your home.

That looks like a bargain to me and this could actually be an opportunity to escape from a problem.

I was in the same boat over 6 years ago, just much (much) bigger figures. My partner successfully purchased my Beneficial Interest (BI) back from the Offical Receiver (OR). She just made an offer, it was accepted, signed some paperwork and sent them a cheque.

The OR will want the best deal for as little fuss as possible, they will accept an offer which is sufficient to equal or beat what they can recover by selling themselves. That will cost them a few thousand pounds in Estate Agent and Solicitor fees, so factor those cost into your offer. If they reject the offer you can always go back with a bigger one. You might even be able to pay in installments.