DRO and beneficial interest

AWWB9AWWB9 Forumite
2 Posts
First Post
MoneySaving Newbie
Good morning, I was hoping for a little bit of advice. I will try to keep it short. I’m a sole trader and due to Coronavirus I now have very little income and I don’t see this changing anytime soon. I have explored all government options and possible benefits and the only option to me would be a loan. I have around £19000 in debt so I approached BDL and it sounds to me I don’t have many options. They suggested an IVA or a DMP but I don’t have enough surplus to make payments? Bankruptcy or a DRO I was told out of the question due to my husband having a mortgaged home and I might have a beneficial interest. I have contacted the insolvency service to ask them what they take into account for beneficial interest and I don’t appear to fit the criteria. Not on the deeds, have never paid towards the mortgage and not paid for home improvements. Really I wanted to hear if anyone has been in a similar position and had a DRO. Can I ask BDL if they will put through a DRO and if the insolvency service was to reject it take the risk as I don’t see I have anything to lose. Or will they refuse to do this. I feel I’m no further forward as I can’t approach anyone else for help and don’t have enough income for any other debt plan. 
Thanks for reading 
please note: I have two employees so walking away would be extremely hard. the business is only making a tiny loss but the problem is  I am no longer seeing a wage. 

Replies

  • fatbellyfatbelly Forumite
    16.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
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    I know Debt Doctor (and myself) have commented on this many  times in the past. We have never known the Offficial Receiver to take any action where there was not an established beneficial interest. Technically 'interest follows title'.

    By established we mean where a court has declared you to have a BI of £x or X%.

    Now the original DRO guidance used exactly that phrase 'established beneficial interest' and then it got pruned to the less exact 'beneficial interest'. As the FCA has tightened up on their regulation of debt advice, it has filtered down to individual advisers that they have to be exceedingly cautious not to put forward an application where there MAY be a beneficial interest.

    That really puts advisers in an impossible position as any established beneficial interest is determined at a lenghty court hearing with barristers arguing for both sides. How your average CAB/Stepchange/NDL desk jockey is supposed to determine that on their own is not clear. 

    CAB guidance to their staff still says: A beneficial interest cannot be established just by living in someone else's house as their partner or spouse (including civil partner) and sharing household expenses or ordinary domestic duties such as bringing up children or generally maintaining the property. If a property is solely owned then the assumption is that the beneficial interest is also solely owned and the onus is on the person who claims to have a beneficial interest to show that s/he has any interest at all.

    The DRO Unit guidance says
    Where a debtor’s circumstances suggest they may have a beneficial interest in any property the AI must take reasonable steps to understand the position and determine whether the debtor meets the criteria for a DRO.

    Below is a list of questions used by examiners in the Insolvency Service to establish a possible beneficial interest in bankruptcy cases. You may find these questions useful as a basis for your own enquiries:
    Do you own or have you ever been the owner of a property?
    Have you transferred a property to a third party, e.g. spouse, civil partner or other associate?
    Are you married to the registered proprietor?
    If so, how long have you lived at the property?
    Did you pay a deposit when purchasing the property?
    Are you shown on the mortgage or on any subsequent charges?
    What mortgage payments have you made and for how long?
    Have you ever claimed to own a property when applying for credit?
    Do you consider you have a beneficial interest in the property?
    If not, why not?
    Have you funded an extension or remedial works to the property?

    So in conclusion - push them to do a DRO
  • AWWB9AWWB9 Forumite
    2 Posts
    First Post
    MoneySaving Newbie
    Thanks so much for replying. I will give them a call and see if I can get it sorted. Not feeling confident but now I know it can be done I will try my best. 
    Really appreciate your advice 
  • debt_doctordebt_doctor Forumite
    4.6K Posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭✭
    fatbelly said:
    I know Debt Doctor (and myself) have commented on this many  times in the past. We have never known the Offficial Receiver to take any action where there was not an established beneficial interest. Technically 'interest follows title'.

    By established we mean where a court has declared you to have a BI of £x or X%.

    Now the original DRO guidance used exactly that phrase 'established beneficial interest' and then it got pruned to the less exact 'beneficial interest'. As the FCA has tightened up on their regulation of debt advice, it has filtered down to individual advisers that they have to be exceedingly cautious not to put forward an application where there MAY be a beneficial interest.

    That really puts advisers in an impossible position as any established beneficial interest is determined at a lenghty court hearing with barristers arguing for both sides. How your average CAB/Stepchange/NDL desk jockey is supposed to determine that on their own is not clear. 

    CAB guidance to their staff still says: A beneficial interest cannot be established just by living in someone else's house as their partner or spouse (including civil partner) and sharing household expenses or ordinary domestic duties such as bringing up children or generally maintaining the property. If a property is solely owned then the assumption is that the beneficial interest is also solely owned and the onus is on the person who claims to have a beneficial interest to show that s/he has any interest at all.

    The DRO Unit guidance says
    Where a debtor’s circumstances suggest they may have a beneficial interest in any property the AI must take reasonable steps to understand the position and determine whether the debtor meets the criteria for a DRO.

    Below is a list of questions used by examiners in the Insolvency Service to establish a possible beneficial interest in bankruptcy cases. You may find these questions useful as a basis for your own enquiries:
    Do you own or have you ever been the owner of a property?
    Have you transferred a property to a third party, e.g. spouse, civil partner or other associate?
    Are you married to the registered proprietor?
    If so, how long have you lived at the property?
    Did you pay a deposit when purchasing the property?
    Are you shown on the mortgage or on any subsequent charges?
    What mortgage payments have you made and for how long?
    Have you ever claimed to own a property when applying for credit?
    Do you consider you have a beneficial interest in the property?
    If not, why not?
    Have you funded an extension or remedial works to the property?

    So in conclusion - push them to do a DRO
    Well s,aid FB!
    Like you, unless the BI has been established by the court, any partner of a homeowner, not on the deeds, can have a DRO.
    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
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