Help please

RUN_DMC

LOOKING FOR HELP PLEASE.


Hi Wondering if anyone can help before we seek legal advice. My ex girlfirend's father sold us his house at an undervalue in 2016 when we were together (we have two children together) I pay the mortgage (£50,000) and see it as investment for our children.


In 2018 her father had to go bankrupt (he's 75) I think in total he went bankrupt for £30,000. My ex received a letter from a debt solicitor stating that they wanted £45,000 from her as their client says he gifted her that much in money but he didn't give her any money at all from the sale of the house, instead he gifted his son £60,000 and he no longer has that money since he lost his house in a divorce. They quoted section 339 of the insolvency act (I have read it). Does anyone have any idea where she stands.

sourcrates

Moved to new thread.

silvercar

I'm a bit confused with the houses.

Her father sold his daughter the house at how much undervalue. At the same time he gave money to his son.

Now whose house has been "lost" in a divorce? the son's or the father's?

On the face of it, her father gave £££ to daughter by undervaluing his house and £££ by way of gift to his son for a house deposit.

3 years later he goes bankrupt and the OR wants to retrieve some of the money.

RUN_DMC

Hi, so her father sold us the house for £50,000. It’s worth £220,000. Father in law gave his son £60,000, £50,000 from sale of the house and £10,000 of his own money. His son used the £60,000 as a deposit on a house which he then lost in a divorce. Less than two years on he had to make himself bankrupt. The debt solicitor is chasing the ex for £45,000 that she didn’t have. Her father still lives in the house and the ex lives in her flat with our children.

RUN_DMC

The father made himself bankrupt not the son.

Caz3121

RUN_DMC wrote: »

Hi, so her father sold us the house for £50,000. It’s worth £220,000.

what was it worth when you purchased it for £50k? (how much was the gifted difference?)
you need to look at "transfers at an undervalue" and bankruptcy

RUN_DMC

Hi can, it was worth about £210,000 at the time. I’ve looked at transfers at undervalue but I don’t get where we stand with section 339. She would have to sell the property to get the £45,000 making her father homeless.

MovingForwards

Did he stay living in the house after he sold it cheap?

TheGardener

Selling any asset at undervalue prior to BR is going to be a problem. The OR has every right to recover the balance for the creditors. Your ex needs professional advice quickly.

Unless he can evidence that he was completely solvent at the time he sold the property to you, the father acted in a way that appears to have been a deliberate attempt to deprive creditors. He must have been aware of this at the time - I cannot believe that OR didn't discuss the issue with him and the OR has 3 years from the date of BR to realise property assets.

As you appear to have a provable financial interest in the property there will be room for negotiation with the OR but I would suggest that between you and the ex there is going to be a risk the property is lost. Has the father been paying rent?

The father needs to start looking for somewhere to rent as soon as possible if the likelihood is that neither you nor the ex can afford to buy back the property.
Is the solicitor acting on behalf of the OR? - if not then try and speak to the OR first.

RUN_DMC

Yes he did. He just pays for the utilities.

silvercar

RUN_DMC wrote: »

Hi can, it was worth about £210,000 at the time. I’ve looked at transfers at undervalue but I don’t get where we stand with section 339. She would have to sell the property to get the £45,000 making her father homeless.

Let's rephrase this. Her father "sold" his property worth £210k to the daughter for £50k and gave that £50k to his son. Effectively he gave away an asset worth £210k.

2-3 years later he goes bankrupt with debts amounting to around 30k. That does not make sense. Why sell so cheap if he had debts to clear?

In retrospect he should have not sold so cheap, but put some money away for a rainy day.

With a property value over 200k he could have taken a mortgage (or equity release if old enough) or a secured loan, to release enough cash to clear the debts. If there was a strategy of giving away a home to then go bankrupt to be rid of debts, some advice should have been taken first.

Also some tax advice would have been useful as giving away a home and continuing to live in it causes problems for CGT tax when it is sold, inheritance tax (a gift with reservation), care home issues (deprivation of assets).

If she is forced to sell, she will get a lot more than 45k in her pocket, so will come out of it very well, as up to now its been providing a home for her father so she hasn't gained a penny other than on paper. With the money over she could provide a smaller home for her father or help him out financially after bankruptcy.

Much the same situation as if he had sold up to clear debts and downsize.