Bankruptcy form advice please.

Notgotapottoweein

Hi

Started filling in our bankruptcy forms today ( gulp )

One bit concerns me though:

Its in the statement of affairs form 6.28.

Question 3.5

Have you in the last five years given away,transferred or sold for less than its true value any property or possessions you owned?

Well yes i have!

I was divorced in october 2004 and part of the divorce settlement included me signing over our joint mortgage into my ex wife's name for the sum of £5k.

The reason i did this was because i never had any debt at that time and i didn't want her to sell the house thus uprooting my son in the process.

The house was subsequently sold by my ex-wife for a profit of around £60k when she moved into her new partners home.

If i'm honest about that on the form ( which i know i should be ) will this have any effect on my ex wife or more importantly my six year old son?.

For the record every penny of my subsequent debt has been aquired after i got divorced. 2006 onwards to be exact.

I'd be grateful if anyone could advise please?

Ps my good lady will be along later with another raft of questions!

Richard_S

Hi Notgot,

My understanding is that if you signed an asset over at less than it's market price, for whatever reason, whilst you were still solvent then it can't be included in a future bankruptcy.

With something as important as that though, I'd definitely want a professional opinion before I put anything on the forms. You could always try the I.S anonymously as a starting point.

Regards

Richard

Notgotapottoweein

Thanks Richard.

Thats what i thought.

The way it reads to me is that the'd only be interested in anything you did that looked dodgy when you knew you were going bankrupt.

fermi

Richard_S wrote: »

My understanding is that if you signed an asset over at less than it's market price, for whatever reason, whilst you were still solvent then it can't be included in a future bankruptcy.

If I remember correctly if the transfer/transaction is up to 2 years before the bankruptcy you don't need to be insolvent for the OR to be able to void the transfer.

2-5 years before, then you must have been insolvent at the time. With someone unconnected the onus of proof that you were insolvent falls on the OR, but if it is to a relative/associate the onus is on you to show you were not.

But yes, some professional advice is a must.

Richard_S

Notgotapottoweein wrote: »

Thanks Richard.

Thats what i thought.

The way it reads to me is that the'd only be interested in anything you did that looked dodgy when you knew you were going bankrupt.

Hi Notgot,

I would definitely check that one with a professional; anything you find out now will be save a lot of potential for recriminations in the future.

Richard

Notgotapottoweein

It should be very clear to the OR that i was solvent at the time,because all the accounts i'm now in debt with i had at that time with no debt attached to them.

fermi

Found the quote I was looking for:

viii Bankruptcy transactions at undervalue (section 339)

As far as a bankrupt is concerned, the transaction at undervalue must have occurred during the 5 years prior to the presentation of the bankruptcy petition. Where the transaction took place in the period of 2 to 5 years prior to the petition being presented, the bankrupt must either have been insolvent at the time or become insolvent as a result of the transaction. The burden of proof falls on the trustee to show that the bankrupt was insolvent at that time.

NB: Where the transaction involved an associate of the bankrupt, there is a presumption that the bankrupt was insolvent at the time the transaction took place so that the trustee does not need to prove that the individual was insolvent. An associate can be the individual’s spouse, or a relative or relative’s spouse of either the individual or the individual’s spouse.

Any transaction that was entered into in the 2 years prior to the presentation of the bankruptcy petition can be set aside, as can any transaction entered into in consideration of marriage and there is no need to show that the individual was insolvent. Only transactions entered into for valuable consideration and in good faith will stand. The trustee must obtain sanction (approval) of the court or creditors' committee before making an application under section 339. (Where the OR is trustee, Technical Section undertake the functions of the creditors' committee on behalf of the Secretary of State. The Examiner/B1 will minute details of the transaction to Technical Section requesting sanction.)

A settlement or transfer of property made as a result of a court order on divorce can still be deemed as an undervalue transaction, although where the divorce court confirms the transaction it may become valid.

and

31.4.28 Period of review (bankruptcy only)

It is necessary to show that the transaction was at an undervalue and that it occurred during the 5 years prior to the day that the bankruptcy petition was presented. If the transaction was entered into in the period of 2 to 5 years prior to the presentation of the petition, the individual must either have been insolvent at that time or to have become insolvent as a result of the transaction. The onus of proving insolvency is on the trustee except in relation to an associate (see below). Any transactions entered into in the 2 years prior to the presentation of the petition are voidable regardless of whether or not the individual was insolvent, unless the transaction was for valuable consideration and entered into in good faith.

31.4.29 Transaction with an associate

A person is an associate of an individual if that person is the individual’s husband or wife, or a relative, or the husband or wife of a relative, or the individual or the individual’s husband or wife. Where an individual has entered into an undervalue transaction with an associate, it is presumed that the individual was insolvent at the time (see paragraph 31.4.2). It is presumed that the person did not act in good faith.

Notgotapottoweein

Thanks guys.

Is there anywhere i can obtain free advice on this?

Notgotapottoweein

fermi wrote: »

Found the quote I was looking for:

and

Thanks Fermi


Would an ex wife count as an associate then?

If so how would i go about proving i was solvent at the time?

fermi

Notgotapottoweein wrote: »

Would an ex wife count as an associate then?

Almost certainly.

Notgotapottoweein wrote: »

If so how would i go about proving i was solvent at the time?

Well, you said yourself:

"For the record every penny of my subsequent debt has been acquired after i got divorced. 2006 onwards to be exact."

So if you can prove all the liabilities you are going bankrupt for now were acquired after the transfer, then I presume that would do it.

Notgotapottoweein

Thanks fermi.

All that info should be on my credit file shouldn't it for the OR to see?

Also another bit:

Any transaction that was entered into in the 2 years prior to the presentation of the bankruptcy petition can be set aside, as can any transaction entered into in consideration of marriage and there is no need to show that the individual was insolvent. Only transactions entered into for valuable consideration and in good faith will stand.


This bit confuses me somewhat though.

Does this bit mean that because the house transfer was part of a divorce settlement then it can be set aside no matter if it was in the 2-5 year period?

And the valuble consideration and good faith bit whats that all about?.

It certainly was in good faith.

Sorry to be a div but this is not my forte!