Bankruptcy & Beneficial Interest experience

AnonAnonAn0n

Hello all,

First post ever in a forum!

I will be declaring myself bankrupt, main creditors are HMRC for unpaid income tax plus fees and interest. Insolvency Service for an overdrawn DLA and then credit cards and unsecured borrowing.

Due to the amount owed, in excess combined £200k, and no income source I am not eligible for any other debt solutions.

I live in my own home, mortgaged with 20k equity, so this will be taken but the thing that keeps me up at night is my ex partner and kids house. I will have a 50% beneficial interest in this house which is explicit unfortunately even though I have not lived there since 2020 and not contributed to the mortgage since May 2021.

Ex partner cannot get a mortgage in her own name due to affordability requirements, so she has serviced the mortgage for 5 years on own, where my 2 children aged 8 and 11 live.

There is roughly 50k equity in the house, so 25k will be my interest as far as trustee is concerned. My ex cannot raise 25k and cannot get a mortgage in her sole name to buy out. Is there any experience of trustee just putting a charge on the house for redeemable amount rather than forcing a sale?

As you read this you will judge and yes I do feel like something off the bottom of your shoe.

Many thanks

Brie

I can't help with any information but don't worry about people being judgey. So many people in your situation are there because of circumstances that could effect any of us and the judgey types should try to remember that.

Hope you can get this sorted if only so you can sleep better and the ex and kids don't get their lives disrupted.

fatbelly

I have a feeling that a charge has a maximum value and 25k may be above that. But have a look at the guidelines

https://www.gov.uk/guidance/technical-guidance-for-official-receivers/7-hm-land-registry-and-protecting-property-interests

AnonAnonAn0n

@fatbelly thank you for that link, you are right there isn't much information of an upper limit just the 1k equity, also because we were never married I believe that the s283A/s335A family home provision does not come into effect even though our infant kids live there.

I was hoping that someone had been through similar or had experience and how in real world the trustee pursued beneficial interest in a case of ex partner and kids living in home who does have 50% BI too. Do trustees force sale or would the be open to charging orders for say 5 year with a determined end date for payment?

AnonAnonAn0n

https://forums.moneysavingexpert.com/discussion/comment/82109353#Comment_82109353

Adding info, house worth circa 145k with 95k redemption on sub prime mortgage.

ManyWays

The fact you are unmarried means the 3 years use it or lose it family home provisions (s283A) do not apply.
Under s335A the Trustee in Bankruptcy still has to consider the needs of any children, but the needs of creditors usually take precedence after a year.

If there is any chance in your ex being able to remortgage in her name in the near future to purchase your share of the equity, it is worth trying to allow for as much time for this as possible.

Is there any hurry to go bankrupt? Why not put your house on the market and let HMRC make you bankrupt if they want?

Could your parents or her parents assist her?

AnonAnonAn0n

https://forums.moneysavingexpert.com/discussion/comment/82109393#Comment_82109393

@ManyWays Unfortunately she is not in a position to get the mortgage in her own name, it is something we have looked into previously. We also do not have parents who have the means to bail us out of my problems. Being perfectly honest I was hoping there were people in this forum who have had similar experiences and could reassure me that it isn't in the interest of the OR to force sale and instead agree payment plans with a charge. Wishful thinking! There is lots of information generally out there but not on this specific scenario. The not waiting is because we have been living this for 3 years and getting nowhere, I have ended up unwell and my ex is living with "impending doom". We both want it over and to be able to move on with our lives, HMRC are likely to petition in next 6 months as they have already threatened and it is with the enforcement teams. The best hope is that they sell my property and my ex and the kids get to stay in their home with a charging order which would give me time post bankruptcy to hopefully raise the money in the future after discharge as it is my mess.

ManyWays

The best hope is that they sell my property and my ex and the kids get to stay in their home with a charging order 

That isn't possible. If the trustee agrees to take a charging order, there will be no sale. if there is a sale it will clear the the mortgage and any charging order.

If they sell it, she will be homeless but with the money from the her half of the equity. She should think seriously about selling this herself instead, as she may get a better price for it.

I do not think you should hope it will be possible for her to stay there.

AnonAnonAn0n

https://forums.moneysavingexpert.com/discussion/comment/82109720#Comment_82109720

@ManyWays apologies to clarify I meant that my best hope is that they sell the home I live in and am the sole owner. And that the property my ex and kids live in is subject to a charging order so they can stay. The maximum equity is 25k for my 50% and court fees and sale costs would need to be deducted from that.

We are talking about two homes, one I live in and own 100% and the one my ex and kids live in where I have a max 50% BI.

ManyWays

What you wrote was clear, I just mis-read it, sorry!.

I think you are hoping for something that is very, very unlikely.
You and your ex should not be basing any plans on a long term charging order being possible.
Your house will be sold, that is irrelevant to the Trustee's decision about the jointly owned house.

I repeat my probably unwelcome suggestion that it may be better for her to sell the house herself. The more it is sold for, the greater her share of the equity will be.
I think your ex should take debt advice on her situation eg National Debtline on 0808 808 4000.

AnonAnonAn0n

https://forums.moneysavingexpert.com/discussion/comment/82110171#Comment_82110171

@ManyWays Thank you, we all want to hear the best but the truth is usually the opposite. I appreciate your time and opinion. May I ask, and in no way do I mean this as rude or ungrateful but for clarity, do you have experience either personal or professional in anything similar? Even outcomes you have seen played out on here? Thanks again.