Charge on a house

ClaireMC

Can a spouse sign over the ownership of a house to the other spouse to avoid a charge being put on it by a business creditor?  

Keep_pedalling

It is not that simple.

https://www.purnells.co.uk/bankruptcy-and-ivas/house/transferring-to-your-spouse

ClaireMC

Thanks. The person has not been made bankrupt but their company was wound up and there is a debt owing on it. They are concerned that the OR will put a charge on their house which they own with a spouse, though have made no financial contribution to the mortgage. Just wondering what the options are. There is a dependent child also. 

TripleH

I doubt that they would be kicked out of their home. Not sure on rules, but as they are married, the starting point is likely to be equal share of equity in property. If equity is £60,000 (so £30,000 split) they could only put a charge on for upto £30,000.

As a (assumed) married couple, it will be assumed they equally contribute to expenses not what they paid for directly.

Obviously that ignores that 1 party might have brought a mortgage free property to relationship and / or said property is not owned equally. The key issue is that if you try to change things now, these can be unpicked to recover as much money as possible. If however you have an historical split this won't be.

It also might be worth checking what was included on the personal guarantee paperwork that was signed (as the debt wasn't killed off when company wound-up I assume a personal guarantee was given?)

Grumpy_chap

Is the company that was wound up a Ltd Co?
If so, was there a Director Guarantee for the loan?
Or another reason why the loan is following the individual after the company is dissolved?

ClaireMC

Grumpy_chap said:

Is the company that was wound up a Ltd Co?
If so, was there a Director Guarantee for the loan?
Or another reason why the loan is following the individual after the company is dissolved?

Yes an overdrawn Directors loan acct as I understand it. 

Grumpy_chap

To clarify, a Directors Loan as in loan from the Ltd Co to the Director?

Are there any other debts owed by the Ltd Co.?

Mouse007

Have you received a demand to repay the overdrawn director's loan account from the OR? and how much is it?

Minkym00

Also worth making the OR an offer on what they’re asking for. Likelihood is that they would accept a reasonable offer otherwise they will have to instruct solicitors and incur costs if they opt for a charging order. 

CStar75

Just speaking from my personal  experience and appreciate that each situation is different but I believe the OR will want the money (or an offer) as a charge will mean they will have to wait for the money, until the property is sold.  My husband was made bankrupt in 2018 due to an overdrawn Director's loan account on a wound up limited business; there was no option for a charge only forced bankruptcy or repay the debt.  We couldn't afford it at the time so forced bankruptcy it was.  In our case, the OR saw the 50% equity share regardless of the debt being in his name and children in the home. Eventually the bankruptcy trustees agreed last year to accept a reduced offer I made which was thankfully accepted, to effectively buy back my husband's beneficial share, to save our family home.