relatives bad debt-can we buy house at reduced rate and let them live rent free?

td

Hi,

I have a close relative who is in money trouble. They have in past had ccjs, got themselves sorted out got a mortgage and a house and they have kep on top of it all for about 10 years. They always live hand to mouth really and every penny counts which is why when one of them was unfairly dismissed (went to tribunal etc) it all went pear shaped because they couldn't get benefits until it was all sorted out but by this time they were in trouble. In steps a loan company offers them a loan (if I'd known I would have stopped this but I didn't) and 2 years ago they took a loan (secured on the house) out for 12000 (I can't believe someone would offer them this much money) this loan has somehow turned into 25000 (I am seeing all paperwork later so will have more of a handle on it)

I got my relative to ring CCCS and she has an app next week so at least steps are being taken.

My question is this:

They owe about 27000 on the house - if myself and my dad put our heads together we could probably find this money and buy the house off them for this amount and then push them into bankruptcy (I think this is the best way to stop anyone else offering them finance and them losing absolutely everything). Are we allowed to buy the house off them at a vastly reduced rate (which is all we could afford), allow them to live there rent free for the rest of their lives and write off the rest of their debt (ie with the secured loan company) and hopefully making their life a little easier. What are the legalities of this? I am self-employed too so it would probably have impact on this.

They've jsut been hit by this 10p tax band disappearing as well - they live by the pennies and cannot afford to lost anyone of them.

td

immoral_angeluk

I'm fairly sure them selling the house just before going bankrupt would raise issues with the OR. Someone will be able to clarify but fairly sure it's not particularly legal.

rayday2

I have a feeling that secured loan turned so high because of PPI if that is the case that is the first thing I would claim back could give them a few thousand within 6 weeks ish.

Which could be enough to live off carefully for a while espeicailly if someone looked after it for them and gave it them in bits not sure if this is possible.

Does £27,000 clear the mortgage and the secured loan?

Also if you are family I don't think they will ever be entitled to housing benefit or you didn't used to be.

As for bankrupcy I have no idea if a house is sold soon to going bankrupt if it effects things or not better asking on the bankrupcy board.

But huge question would they really want you do all this for them?

itsnever2lateisit?

td wrote: »

Hi,

I have a close relative who is in money trouble. They have in past had ccjs, got themselves sorted out got a mortgage and a house and they have kep on top of it all for about 10 years. They always live hand to mouth really and every penny counts which is why when one of them was unfairly dismissed (went to tribunal etc) it all went pear shaped because they couldn't get benefits until it was all sorted out but by this time they were in trouble. In steps a loan company offers them a loan (if I'd known I would have stopped this but I didn't) and 2 years ago they took a loan (secured on the house) out for 12000 (I can't believe someone would offer them this much money) this loan has somehow turned into 25000 (I am seeing all paperwork later so will have more of a handle on it)

I got my relative to ring CCCS and she has an app next week so at least steps are being taken.

My question is this:

They owe about 27000 on the house - if myself and my dad put our heads together we could probably find this money and buy the house off them for this amount and then push them into bankruptcy (I think this is the best way to stop anyone else offering them finance and them losing absolutely everything). Are we allowed to buy the house off them at a vastly reduced rate (which is all we could afford), allow them to live there rent free for the rest of their lives and write off the rest of their debt (ie with the secured loan company) and hopefully making their life a little easier. What are the legalities of this? I am self-employed too so it would probably have impact on this.

They've jsut been hit by this 10p tax band disappearing as well - they live by the pennies and cannot afford to lost anyone of them.

td

I dont think you can. The OR will look for assets they have 'disappeared' and it will become apparent that the house was disposed of at a knock down price to the detriment of other creditors. The Inland Revenue would miss out on Stamp Duty and there may be CGT implications for you. It might be better for you to lend the money secured against the house

floss2

td wrote: »

They've jsut been hit by this 10p tax band disappearing as well - they live by the pennies and cannot afford to lost anyone of them.

Are they able to claim tax credits at all?

It sounds a little unethical, buying a property for the value of the secured loan. What is the outstanding mortgage? How much is the house worth? Is there any equity in the property at all?

Have they been told of your plan to "push them into bankruptcy"?

And if you were to contemplate all this, it would have to be with their full & informed consent, and you would need to provide a tenancy agreement to protect their rights as tenants.

tonyE1

If all the secured creditors agree to selling of the house ie if they get paid off then what is there to stop you doing this?
When a company provides an unsecured loan, they are doing it knowing they have no claim against any assets of the person. If that person then going bankrupt then that is life. I think you will find it is not uncommon for people to transfer their house etc into sole ownership of their partner in anticipation of this situation. Not a lot the loan company can do.

penguin83

Check out the bankruptcy board for clarification but I think selling the house for such a low price would count as delibarately ridding themselves of assets which would cause problems x x

floss2

tonyE1 wrote: »

If all the secured creditors agree to selling of the house ie if they get paid off then what is there to stop you doing this?
When a company provides an unsecured loan, they are doing it knowing they have no claim against any assets of the person. If that person then going bankrupt then that is life. I think you will find it is not uncommon for people to transfer their house etc into sole ownership of their partner in anticipation of this situation. Not a lot the loan company can do.

The mortgage-holders may object......as may the HMRC. And the OR.

td

I'm just fielding possibilities at the minute. Yes I think the secured loan is so high becuae of "some kind of insurance" - I will be looking into that in more detail later - they are not financially savvy at all and don't know what they've been paying for. It's not my preferred option for them - it would leave me with little myself though I would be able to cope. Just wanted to know if it was an option - perhaps it's not. What I don't want to do is bail them out just by giving them money to pay off their debts because I know it will happen again - which is why I thought bankrupcy - yes we have discussed it - so that they CANNOT get credit anymore but still have their house to live in.

td

rayday2

I think the best thing you can do for them is to check out the PPI bit and get a full breakdown of what they owe to who, and what their outgoings are. They may live hand to mouth but to an outsider there could still be luxuries there or less savvy ways of spending.

td

i just feel so useless - the problems are a bit big for me so don't know how they must be feeling