Annulment of bankruptcy - Trustees

CStar75

Hi, I posted a thread a short time ago but am unable to find it and would like to ask for further help. Long story short...my husband was made bankrupt for a disputed debt, we were advised to use equity in home to repay debt by the OR to annul it but we struggled to source the money needed as we couldn't get a bridging loan from all the companies I approached as they all felt there was too much adverse credit and the remaining equity was too tight. We could sell the home ourselves but the OR said we couldn't keep it within their office and it would go to trustee anyway so the 15% realisation fee would be irrelevant. Selling would put us in further debt trying to find alternative costly accommodation as we would prefer to remain in the local area for children's school and my work. I fear we couldn't buy another home immediately due to my husband's bankruptcy remaining on the credit file for mortgage applications. Rent would be at least 3 times our current mortgage monthly payments and also landlord credit checks would show the BR. We were left with no alternative than to withdraw the court annulment application and it has now gone to trustee. We have now heard who the trustees are and they come under the same umbrella of the liquidating company (original creditor) and trade from the same offices so the case has gone full circle and back into the hands of the petitioning crefitor which we feel is a huge conflict of interest. Is this acceptable or should we push to appoint our own trustee? Is there anyone we can turn as we feel this is unfair and we can't afford any more legal help to fight it. How can they remain impartial and how can we stop them from absorbing all of my husband's remaining equity in fabricated fees? Thank you.

Minkym00

You can’t appoint your own trustee. Any creditor (or group of creditors) that is owed more than 50% of a bankrupt’s debt/s has a legal right to nominate an Insolvency practitioner as trustee to deal with assets. Given that the petitioning creditor can quite often by the majority creditor then it is very common that the same firm that handled the petition or liquidation is appointed as trustee. They must be licensed Insolvency practitioners approved by the OR and will have rules to abide by, at risk of losing their licence. All the fees will be clearly presented to you at the end of the process and you could challenge any you think are unreasonable at that point. A fee breakdown is also sent to the OR.

How much equity is there in the property?

Brock_and_Roll

Referring back to the OPs original posts it seems that by continuing the only winners are the lawyers.

In the initial post the secured debt was £80k and the equity was £165k (unclear as to before or after the debts paid)....either way, plenty of juice.

The OP at the time was given solid advice:

"You can only get an annulment in two ways. The first is ‘ought not’ which is where you can prove either the debt was never owed or there was some sort of technicality (I.e. you weren’t “personally served”). The second is for ‘paid in full’ which includes the debts and all the fees. As there is equity in the property the OR will get an insolvency practitioner in and they will sell the property and charge extortionate fees.

If you sell it yourselves then you will save a lot of cost. If you put it on the market now then the OR is is likely to allow time to do this."

Seems to me that the OP's reluctance to sell the family home will end up whittling all the equity away for no benefit and a lot of stress.

Of course with cash in the bank from a sale, it would be possible to get rented accommodation, plenty of sensible landlords would be happy to take a larger rental deposit to cover a perceived higher risk.

CStar75

Ok thanks for your replies, I appreciate them. The OR recommended we go for annulment but also said the 15% realisation fee would be irrelevant as it would go to trustee anyway based on what a Zoopla estimate valued at. We can't get a true market value of the property as there is such a short lease (57 years) and although, if it was freehold there would be enough equity to pay creditors. We explored many bridge lenders but all said the lease (even though we wanted to borrow also to convert it) and adverse credit was too risky even with a sale exit route, so we had no choice than to let it go to trustee unless we missed an alternative option along the process?

CStar75

...also to add, we took the advice of a no win, no fee annulment specialist who failed to supply a lender in enough time before the annulment hearing. They always ensured us that we would not lose the family home! Although that hasn't been suggested yet, I can't see us finding an alternative way out of this mess as we have no other assets!

Brock_and_Roll

Ouch 57 years lease...that's a bit of a showstopper.

We can't get a true market value of the property as there is such a short lease (57 years) and although, if it was freehold there would be enough equity to pay creditors.

So are you saying that due to the short lease there is not actually any equity at all?

Million dollar question - if the property were put through auction today, warts and all, short lease etc, how much would it go for? If I were owed money, this is what I would want to know!

Is the property in London i.e. very easy to sell at auction?

How much would it rent for - i.e. if I bought it and held it for 57 years and wanted to get a 5% rental yield, then regardless of the lease, if the monthly rent were say £1,750, then I would pay (£1,750 x 12) / 5% = £420k.

molerat

OP's original post for reference
https://forums.moneysavingexpert.com/discussion/comment/75427706#Comment_75427706

CStar75

Hi, we had it valued by an estate agent who said that it would be difficult to give a true value with a short lease based on the liklihood a mortgage company would not lend someone the money. Other option is cash buyers. We live 25 miles outside London and probably could fetch £1400 per month rent. The agent valued the house at £500k based on a freehold and suggested us buying the freehold with the proceeds at the time of sale to retain maximum value - however he couldn't confirm if this could happen for sure. Do you think trustees would accept us selling ourselves and making interim payments until then as I have a beneficial interest and children to consider or will it go to auction? Our secured creditors are owed £220k (joint); £30k (husband); £60k BR/OR fees and now trustee fees. Or will the trustees let us remain in the home making interim payments although I'm not sure how we could afford huge monthly payments? Thank you.