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

rayday2

When people are in debt like that the best feeling in the world is that there is someone to talk to, we don't expect magic wands but someone to talk to and air things is invaluable.

Remember this is their debt, if people try to solve things too much you can feel out of control and useless but working with them would make it so much easier to manage.

peb

Sorry; this will not work. It is a transaction at an undevalue and can - most likley will - be overturned.

tallyhoh

Have I missed a bit? Do they owe any other loans besides the loan? If not on what grounds can you push them into bankruptcy?

You also mention pushing them into bankruptcy to stop them getting into debt again

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that will not work, they will probably be discharged after 12 months & then can re-apply for credit, not saying they would get it but they could. They might also go to loan sharks.

As already stated the OR would take a dim view of the house being sold & could refuse bankruptcy--making things worse.

It would be a good idea to post again after you have seen all their paperwork. The people here (not me) are excellent at suggesting stuff to help.

loopylu36

I am a bit confused too. If the only debts they have are the mortgage and secured loan totalling £27K, if you "buy" the house from them at that sum thus repaying these debts, how can they declare themselves b/r with no debts?

Also as previous poster advises, "buying" the house for this sum would constitute an undervalue, and the OR would be entitled to seize the house from you any time up to seven years after the date of the "purchase". And they would almost certainly do this if your sister goes b/r.

If you can afford to repay the loans for her why don't you just do that and come to an arrangement regarding repayment? You could take a charge on the property yourself to protect your interest if you felt you needed to or (and) create a Declaration of Trust in order to protect your respective shares of the equity. Presumably aside from repaying the debt to you, they wouldn't need to pay any rent so the claiming or benefit is a bit of a non- issue?

HTH

td

Thanks for all your help and avice. I think it was a panic knee jerk reaction trying to make her feel better. We instead sat down and rang round loads of places to get her an extra job - she ended up with a few nights behind the bar in a pub which she started last night! That's gotta boost her confidence which is part of the big problem really and will get her around other people a bit more as the job she has is working on her own. She has her phone back with CCCS tomorrow so fingers crossed things get better from that.

td

excel1

Whilst it seems you are doing other things kust to clear up the issue, you were proposing to clear £27000 mortgage but leave the 12000 or 25000 depending on the way it turns out, this would be at least over turned and considered a delberate attempt tohide "money" from the OR also when a porperty is sold all people with a charge against the property are informed and if the secured loan people thought they werent getting paid then they could stop it in the courts, and the people being made bankrupt could face restrictions of up to 15 years and not be discharged until that time, i know i wanted to do the same thing for my in laws, and fortunately did the research and didnt do it.

td

Hi,
thought I'd pop back and give a bit of the better news since my last post on the thread.

My relative has since my last post managed to get 2 jobs, very part time and not paying a great deal but every little helps. The debt charity helped to get in touch with the loan company and mortgage company and reduced payments by half for 6 months (which will be up next month). Her dh got a better job which actually has regular hours and pays better. My relative also (fingers and toes crossed) went for an interview and has hopefully got a job with regular hours but on a temporary basis until she proves herself hopefully, this place is part of local council and not dependent on anything the credit crunch has to offer so if she is good at the job it could become a secure job. (as I say everything crossed for her)
.
She's also got bank charge reclaims in and loan insurance claim in.

So things are looking better and I'm really hoping that she tries to reduce her debt a bit and doesn't get into this situation again but I have a huge amount of respect for the amount of effort she's put into getting jobs (despite how crap it must have made her feel to keep getting knock back after knock back).

So hopefully future's looking brighter.

Thanks for all of your comments and advice

td