old home under threat in BR?

london1973

some of you may have already seen this under another thread today, apologies if so, i'm going to try under a new one as didn't seem to be getting many reads or responses, being an add-on to a very old post of mine!

"I've come back to an old thread of mine, hope someone can assist or share experiences
As an update I was declared BR a month ago, 18 months ago my ex-wife sold our home and moved on, buying somewhere new for her and our small kids-of course agreed by me-the total amount realised was LESS than the mortgage-this is important as almost all of the mortgage (through various additional loans over the years) was used personally by me (usual statement here; not proud, no judgement please, previous life, reformed etc!)

So my ex effectively had less out of the house than me, ALSO her parents paid around 80% of the property when we bought it

Explained all of this to the OR in my interview and he understood, nodded a lot and concluded by saying , 'from looking at this a distribution to creditors is unlikely' (no other assets and not working), but also added they might need to get back in touch with me

IF the OR/Trustee does decide they want to try and unwind the sale how do they do it? presumably they can't force a sale of my ex's new house, which is solely in her name, or can they? what other courses of action are open to them, to get my half of the proceeds, obviously we'll challenge anything, and we have been informally advised we have a very strong case, largely for the above reasons

I'm hoping we will get away with it, but need to prep as much as possible should things turn nasty, relations with my ex are frosty but amicable, however she is extremely unsophisticated on matters like this, and prone to panic, (i.e thinks someone will just turn up and turf her out the next day), which has a knock-on effect on our fractious situation and henceforth the kids etc-so preparation is key for me in handling a situation should it arise

london1973

sorry not clear probably, meant the amount realised was the amount left over after the mortgage was redeemed,
so mortgage repaid in full and left over used by ex to purchase new home

Mouse007

It would help if we could have some rough numbers:

How much was the original deposit (80% of which was provided by her parents) ?

How much was the original mortgage ?

How much did she end up with to put down for next property ?

I'm asking because you may be able to argue the deposit funds provided by her parents were provided by her, and were then returned to her. Your aim will be to refute the presumption that the equity was held 50:50.

debt_doctor

Hi,


The OR may well consider that you have made a Transaction At Undervalue (TAU) by giving away your share of any beneficial interest in the 'old property'.


What matters is what value did you have prior to bankruptcy and why did you do it.


You may have said (sorry if you have) but were you joint owners? I note that others seemed to have put money in to the property but the starting point will be what was registered at the land registry at the time of the purchase of the old property.


Was it held in equal or unequal shares?


I'm sure your reasoning was to put a roof over the heads of your children but the OR may well consider that you may have taken your action to put your interest in the property beyond the reach of your creditors.


The OR has the power to overturn TAU and restore the original position - but that is a very complex process.


So...
Who were the owners?
How was the property held at the land registry?
Who put money in and how much?
Who paid the mortgage?


DD

london1973

Thank you, and apologies for the delay in responding

Mouse007; the numbers themselves are slightly irrelevant, they are pretty mind-boggling to be honest and not something i'm proud of, however to your final point yes this is something I would argue strongly, and interestingly the amount of the original deposit and the amount realised post redemption was almost identical-and all went into the next property

DD; the short answer is yes, technically this might be construed as a TAU, (joint ownership, I paid the mortgage etc) however this was done as part of separation agreement and not in any way to deprive creditors, the house went on the market nearly 3 years ago (took an age to sell), at which point my financial position was markedly different-in short I confessed my profligacy to my ex and, justifiably, she couldn't cope with the breach of trust and wanted to move on, as I had spent most of the borrowings on myself we agreed she could have whatever else was left over-LESS than the mortgages I should add-there is some legal precedent to all of this, called Equity of exoneration I believe, but I don't want to go down there until we definitely have a problem, as I say the OR was quite sanguine (from my perspective!) when we met

you say the process of restoring the original position is complex, can you expand on this a bit? I think it would be useful info

thank you very much for your input

NotEvanAPot

I can quickly throw in that Equity of Exoneration cannot be used if you contributed a disproportionate amount to daily running costs of the home, regardless of contribution prior to the purchase.

I will message you a former colleagues details if you want a chat over things by phone? He does bill at ludicrous per hour though, so keep it brief!

london1973

thanks, yes that would be helpful-although i'll hold fire until something happens, have racked up far too many legal/accountancy fees over the past few years when, with the benefit of hindsight, it may have paid not to panic and just disappear under the radar for a bit

the original advice on the EOE, provided by a colleague of a very serious and reputable friend to be fair, was to demonstrate via bank statements etc that the various mortgages fairly instantaneously went straight to me and on to my personal expenditure and various addictive habits- and to accurarately quantify this amounted to more than the eventual equity AND my ex was in the dark

Mouse007

If you haven't already found this

https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part3/part4/part_4.htm

Might be worth a read

The original intention of your ex's parents may be the key here - be careful to note the last sentance in 31.3.130

NotEvanAPot

london1973 wrote: »

thanks, yes that would be helpful-although i'll hold fire until something happens, have racked up far too many legal/accountancy fees over the past few years when, with the benefit of hindsight, it may have paid not to panic and just disappear under the radar for a bit

the original advice on the EOE, provided by a colleague of a very serious and reputable friend to be fair, was to demonstrate via bank statements etc that the various mortgages fairly instantaneously went straight to me and on to my personal expenditure and various addictive habits- and to accurarately quantify this amounted to more than the eventual equity AND my ex was in the dark

In the dark in terms of falsified information given to lenders? That is an entirely different kettle of fish, something which would be handled separately had shortfalls been included within bankruptcy or an unequal division of equity at time of sale.

I concur that jumping the gun and incurring excessive costs potentially unnecessarily would be the wrong course of action for now. You will have plenty of notice from the OR if they wish to start picking things apart.

london1973

thanks- mortgage was with barclays and just opened account with them so hope unpicking doesn't run too deep!