Sale of flat during bankruptcy

maccasback

Hi all....I am in the process of selling my flat (Joint owned with wife) . A creditor has put a final charging order on property which I will pay on sale leaving me with very little for my share of equity.
The same creditor has also petitioned for bankruptcy!!! If I am made bankrupt before sale of flat what are the implications when OR gets involved? Are they likely to stop the sale or let it proceed and take rest of my equity?
Timing of this very bad and woukd like an idea of where I stand ...any help much appreciated

foxy-stoat

If the sale of the property will clear their debt, I would question whether a court would grant a BR order unless the equity didnt cover the debt.

TheGardener

If you go BR before the sale the OR will assume complete control of the sale and the distribution of the proceeds of your share.

Are there any other creditors? If so, and you are made BR, then you cannot treat them differently and the proceeds of the sale would need to be shared amongst any other creditors.

Please get professional debt advice from one of the free charities before you go any further with this.

maccasback

Hi ...the charge does not cover the full amount owed...
As for sale would the charge not take preference over other creditors (There are several) and the balance taken by OR ?

TheGardener

If there are several creditors then you really do need to take professional advice as soon as possible.

The OR will treat all creditors as equals. The creditor who has secured their debt against your asset will know this and will obviously want to get their money first but there would be no benefit in them spending nearly £1000 in fees to make you BR if they have already taken what they know you have? The BR may be an empty threat to get you to panic and hand over the cash.

Please get professional advice.

D_M_E

If the debts are in your name only and the property is jointly owned then there is most likely not to be a full charging order on the property.

Have a read of this thread

https://forums.moneysavingexpert.com/discussion/1839539/charging-order-the-myth&page=192#topofpage

Have you checked the Land registry and looked what it says there about your property?

maccasback

Thanks...I will get advice in morning and let you know

Lacemaker

Hi,

A Petition will show up on searches, you will not be able to proceed with a sale unless it is withdrawn,


Edited to say ( because I'm a bit tired) a secured creditor cannot petition. Though they could be a bit !!!!py and relinquish the charge at the last minute,

L

Minkym00

If the debt is owed and the stat demand has been served correctly then there is a very high chance that the bankruptcy order will be granted - even if the equity in the property isn’t enough to cover the debt. But you may well be able to argue to the judge to be allowed time to sell the property to settle the debt before the bankruptcy order is granted.

Plenty of people are bankrupted without any assets. There can be a number of reasons why a creditor would choose to spend money bankrupting someone for a deb’t wont be paid. Usually it’s credit lenders that do it to put the message out that they will robustly deal with anyone not repaying their debts (Funding Circle are particularly known for this, which is somewhat understandable as they’re a peer-to-peer lender and rely on investors for their business model). Or they just to do it to pee off the debtor. Or they know there are assets that have been transferred away and the OR can go after them.

If there is equity in your beneficial interest then the petitioning creditor may see a return when the trustee sells the property, otherwise. Y relying on a charging order being realised might not see a penny for years, so petitioning for your bankruptcy is in their interest.

In your case the OR would not stop the sale as long as it is being sold for market value. This would be best for you as an IP may be appointed to sell the property which would cost you many many £s in fees.

As above post says, charging orders are made an against an individual so would only be paid out of your beneficial interest in the property. Your wife will get her full share.

The Gardener has not got it quite right though. All secured creditors are paid out of the proceeds of sale first. Then the OR takes their fees. Only then are unsecured creditors paid out.

Minkym00

To add, if there are many secured charge holders they are are paid out of your beneficial interest in the order in which they were added. So mortgage company first, then the first person that added a charge, then the next person that added a charge etc etc.

maccasback

Lacemaker are you saying that a creditor with a charging order cannot also petition bankruptcy ?