Partner potentially going bankrupt

young_lady

My partner has amassed quite a high level of unsecured personal debt within the last year and as a result of ill health and job changes is going to struggle to make repayments each month going forward. Stepchange have suggested the best course of action might be to go bankrupt.

We live together in a house that is solely in my name, mortgage in my name and deposit funded by my savings. We are not married but do have a child together. Council tax is in joint names, all other utilities in my name only.

One of our concerns is that if the official receivers consider him to have a beneficial interest in the property, our home could be at risk. Can someone advise me as to how they would calculate a beneficial interest? For information, we split the household bills (including mortgage payment, although he treats it as a rent) in half although he hasn’t paid every month due to his financial predicament.

The OR enquiry line, Stepchange and CAB are all unable to tell me how a beneficial interest would be calculated, only that it would be down to the individual OR to calculate if my partner goes down the line of bankruptcy. Would it just be based on 50% of the capital portion of the mortgage repayment since we moved here?

Many thanks in advance.

National_Debtline

Hi there


I can certainly understand your concerns but unfortunately working out beneficial interest is complicated and it's unlikely anyone will be able to tell you exactly how the OR will do it. I would suggest looking into seeking legal advice before your partner applies for bankruptcy. If you Google law centres or law clinics you may be able to get some free legal advice in your local area.


Good luck with it all


Susie
@natdebtline

maxmycardagain

Hes a lodger..... give him a rent book...

young_lady

Is this actually a potential option?

young_lady

What sort of legal specialist should I be looking for?

Willing2Learn

maxmycardagain wrote: »

Hes a lodger..... give him a rent book...

young_lady wrote: »

Is this actually a potential option?

No, that is not an option, as it would be unlawful.

young_lady wrote: »

What sort of legal specialist should I be looking for?

You need to find a Law Centre or Community Law Clinic in your area as they may be able to give you free legal advice re your bankruptcy question and the potential ramifications.

You could also post your question on the LegalBeagles forum as they are more likely to have an answer to your problem.
https://legalbeagles.info/

Red-Squirrel_2

maxmycardagain wrote: »

Hes a lodger..... give him a rent book...

He's definitely not a lodger, this is misleading. Please don't give advice on such serious matters if you aren't 100% certain it is correct.

boliston

surely someone would need to contribute in some way to a property to gain a 'beneficial interest' such as paying for part of the deposit or paying a share of the mortgage repayments. if you share a property with a third party (such as a partner) and they only pay for their share of utility bills and food i can't see how they could accrue a beneficial interest in the capital value of the property

Andy_WSM

boliston wrote: »

surely someone would need to contribute in some way to a property to gain a 'beneficial interest' such as paying for part of the deposit or paying a share of the mortgage repayments.

They do pay a share of the mortgage payments!

young_lady wrote: »

For information, we split the household bills (including mortgage payment, although he treats it as a rent) in half although he hasn’t paid every month due to his financial predicament.

He can "treat it" how he likes, but it's still a share of the mortgage payments.

fatbelly

Tried to post this yesterday but have spent 18 hours with my IP being banned by the administrator. Seem to be back now...

It's a common issue raised by the debt charities. None of them will stick their neck on the ilne and say 'there is no beneficial interest' for obvious reasons. So they all say 'there might be' and the debtor never gets clarity.

The OR guidance is here

https://www.insolvencydirect.bis.gov.uk/technicalmanual/ch25-36/Chapter31/part3/part4/part_4.htm

The court has held that, in deciding the shares in which a property is to be held, each case will turn on its own facts. Matters to be taken into account include:
•Creation of a trust (see paragraph 31.3.134).
•Advice or discussions at the time of transfer which shed light on the parties’ intentions.
•The reasons why the home was acquired in joint names or in a sole name.
•The reasons why (if so) it was intended that the property would pass to the survivor should the other party die (jointly owned only).
•The purpose for which the property was purchased.
•The nature of the parties’ relationship.
•Whether the parties’ had children for whom they both had a responsibility to provide a home.
•How the purchase was financed initially.
•How the monthly mortgage repayments were made and by whom.
•How the parties arranged their finances, whether separately, together or a bit of both.
•How they discharged the outgoings on the property and other household expenses.
•Any capital improvements to the property and who financed them/made loan repayments. These should be significant. Repairs and decoration, unless significant should not be taken into account [note 25].
•Consideration of life events e.g. separation of the parties.
•Liquidation of other joint assets after purchase of property.

The court has held that, even taking all this into account, cases in which the joint legal owners intended that their beneficial interests would be different from their legal interests would be very unusual [note 20].

Note the final sentence.

debt_doctor

Hi,
Whilst it must always be said in giving advice that a bankrupt may have established a beneficial interest in someone else's property, my teams long experience has never seen an OR or an IP pursue an interest in a property that is in the sole ownership of the non bankrupt partner.
One of our advisers previously spent 10 years as a level 2 examiner in the Insolvency Service and he has never seen it happen either.

I can't guarantee that you won't be the first.

DD