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  • FIRST POST
    • lifeoflearning
    • By lifeoflearning 25th Jun 19, 8:17 AM
    • 20Posts
    • 2Thanks
    lifeoflearning
    Selling beneficial interest to spouse - house in spouse's sole name
    • #1
    • 25th Jun 19, 8:17 AM
    Selling beneficial interest to spouse - house in spouse's sole name 25th Jun 19 at 8:17 AM
    Hi all,

    Found lots of helpful info on here over the years but can't quite find a definitive answer to my question in my research so thought I'd post up!

    10 years ago I defaulted on multiple credit agreements (combination of having too much money as an early-20 year old, being irresponsible with my borrowing, and then losing my job). Anyway, they have all dropped of the credit rating and in a way have fallen into the abyss! 2 of them are over the £5k mark that COULD see the creditor be able to petition the court for bankruptcy. I say COULD as I've heard nothing from one of them for nearly 4 years (no idea if they even still own it!), and the other was sold on. but I believe it to be unenforceable due to them not having the correct paperwork - they will both become statute barred in 2.5 years time. So whilst it doesn't look likely that they will try to bankrupt me, I don't want to take any chances with regards to my wife's house and feel like I need to take some defensive action. N.B. I've used briefing paper CBP5271 as the basis of the following logic, however I may very well have misinterpreted it so please forgive me if that is the case!

    Fast-forward to now..........married with 2 kids and no longer an irresponsible fool (lessons learnt by growing up, having no money, as well as not having access to credit for over 6 years!). The house in which I live is in my wife's sole name; she bought it 4 years ago from the council on the RTB scheme (we were together at the time), but as the tenancy was in her sole name, the discount given (which also formed the deposit for the purchase) was in her sole name also. Also, given my poor credit history from the defaults (these debts were accrued way before we met btw), she was the only one on the mortgage, and has been ever since. However, I accept that I MAY have accrued some beneficial interest in the property given that I will have contributed to bills etc. Things get complicated as we used to bank jointly so its hard to prove whose money paid for what, so I just want to think worst case scenario and assume that I do have BI to avoid any grey areas. I am now unemployed and have no source of income; my wife is currently the "bread-winner" as I am now studying, and it will be as such for the next 3 years. So, my thinking is that from this point on, my contribution being £0, I will accrue no further BI, and this will all be easy to document, especially given that we now bank separately. But I am still worried about any BI that I will have accrued in the last 4 years. What I would like to do is have my wife buy my beneficial interest in the property, rendering me with nothing, and I wish to do this now, IN CASE anything happened; I believe that if I were to wait and any of the creditors did attempt to make me bankrupt, this would not be possible at that point as an OR would look at the transaction as evasive; so a transaction way before the potential event seems to be sensible to me; are there any flaws in this logic? Just to be clear, I am not talking about an undervalue transaction; there would be actual money involved at the correct value. Also, I just want to re-iterate that I myself have no intention of filing for bankruptcy, this is in case a creditor were to attempt to bankrupt me, and of course all would be done with no provable foresight of a bankruptcy.

    I'm wondering how we go about legally and officially doing this so that it can never be in question at a later date. Also, I am wondering how on earth my BI would be calculated.

    Sorry about the long-windedness of this question, any help much appreciated!
Page 1
    • ciderboy2009
    • By ciderboy2009 25th Jun 19, 9:57 AM
    • 587 Posts
    • 546 Thanks
    ciderboy2009
    • #2
    • 25th Jun 19, 9:57 AM
    • #2
    • 25th Jun 19, 9:57 AM
    If I were you I would give up on this idea - mainly because the first thing you would have to do would be to get divorced!
    • lifeoflearning
    • By lifeoflearning 25th Jun 19, 10:11 AM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    • #3
    • 25th Jun 19, 10:11 AM
    • #3
    • 25th Jun 19, 10:11 AM
    Really?! Why would I have to get divorced?! Is it because you can only gift things to a spouse, and not sell?

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

    This talks about selling your share to your spouse, doesn't say you need to divorce first!
    Last edited by lifeoflearning; 25-06-2019 at 10:18 AM. Reason: Posted link to article
    • ciderboy2009
    • By ciderboy2009 25th Jun 19, 10:44 AM
    • 587 Posts
    • 546 Thanks
    ciderboy2009
    • #4
    • 25th Jun 19, 10:44 AM
    • #4
    • 25th Jun 19, 10:44 AM
    It actually depends on the amount of equity in the house.

    However, it is likely to be assessed that, as you are married, then your beneficial interest in the property is 50% - "what's mine is yours" etc.

    You would therefore be giving away a fairly large asset which could be frowned upon were you to be declared bankrupt.
    • lisyloo
    • By lisyloo 25th Jun 19, 11:10 AM
    • 24,755 Posts
    • 13,119 Thanks
    lisyloo
    • #5
    • 25th Jun 19, 11:10 AM
    • #5
    • 25th Jun 19, 11:10 AM
    Really?! Why would I have to get divorced?! Is it because you can only gift things to a spouse, and not sell?

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

    This talks about selling your share to your spouse, doesn't say you need to divorce first!
    Originally posted by lifeoflearning

    You cannot just get divorced because it suits you financially (I’ve looked into it for tax planning).
    There are specific grounds for divorce e.g. abandonment, adultery etc.

    Of course you could lie but you’d have to live the life of hermit afterwards to avoid a charge of perjury in case anyone posts a photo of you together on social media.

    P.s. I wasn’t seriously looking into it, but sometimes I get curious.
    • lisyloo
    • By lisyloo 25th Jun 19, 11:12 AM
    • 24,755 Posts
    • 13,119 Thanks
    lisyloo
    • #6
    • 25th Jun 19, 11:12 AM
    • #6
    • 25th Jun 19, 11:12 AM
    This isn’t a judgment or criticism but have you considered paying off the debts.

    I received erroneous sums in the past (a bonus that wasn’t pro-rated).
    I volunteered the money back, not because I’m an angel but because I didn’t want it hanging over me for 6 years.
    • Minkym00
    • By Minkym00 25th Jun 19, 11:43 AM
    • 136 Posts
    • 53 Thanks
    Minkym00
    • #7
    • 25th Jun 19, 11:43 AM
    • #7
    • 25th Jun 19, 11:43 AM

    Unless you have made any provable financial contributions towards the property the OR will not consider you have a beneficial interest in it. There was a question on this forum the other week and the poster was in exactly this position, and they updated me privately that the OR took no further action.

    (If you do however want to calculate a potential beneficial interest then this is where it is calculated https://www.nationwide.co.uk/about/house-price-index/house-price-calculator)

    Your best option is to avoid bankruptcy by getting any individual debts under £5k. But I appreciate that this is effectively poking the sleeping tiger.

    Additionally if you were made bankrupt the OR would be looking to see that any monies received from your wife went towards paying off your debts equally to avoid a preference allegation.

    • lifeoflearning
    • By lifeoflearning 25th Jun 19, 2:49 PM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    • #8
    • 25th Jun 19, 2:49 PM
    • #8
    • 25th Jun 19, 2:49 PM
    You cannot just get divorced because it suits you financially (I’ve looked into it for tax planning).
    There are specific grounds for divorce e.g. abandonment, adultery etc.

    Of course you could lie but you’d have to live the life of hermit afterwards to avoid a charge of perjury in case anyone posts a photo of you together on social media.

    P.s. I wasn’t seriously looking into it, but sometimes I get curious.
    Originally posted by lisyloo
    Oh, no! I'm not even considering that! Besides, even if I were, it would never wash with the wife! I was just asking why I would need to divorce to do what I was asking, not that I was entertaining the idea!
    • lifeoflearning
    • By lifeoflearning 25th Jun 19, 3:02 PM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    • #9
    • 25th Jun 19, 3:02 PM
    • #9
    • 25th Jun 19, 3:02 PM

    Unless you have made any provable financial contributions towards the property the OR will not consider you have a beneficial interest in it. There was a question on this forum the other week and the poster was in exactly this position, and they updated me privately that the OR took no further action.
    Originally posted by Minkym00
    This is interesting, thanks for that info. Would you be able to post a link to that thread for me to read through; I couldn't find anything remotely similar to my situation in my research so would be great to read. When it comes to proving contribution towards the property, do you know how this is done? I always thought the responsibility would lie with me to disprove BI as opposed to it being the other way around.

    Yes, don't really want to go poking around with things; after all, it's possible that things will just sit for the next couple of years and then this will all be immaterial anyway

    Thanks.
    • Minkym00
    • By Minkym00 25th Jun 19, 5:19 PM
    • 136 Posts
    • 53 Thanks
    Minkym00
    The thread is here https://forums.moneysavingexpert.com/showthread.php?t=5999336
    • lifeoflearning
    • By lifeoflearning 26th Jun 19, 2:44 PM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    Thanks for posting that.........and so glad things were ok with that person. Would hate to think what would have happened if things had gone the other way with her bankruptcy.

    So finally after YEARS of trying to understand how BI is viewed with regards to bankruptcy, I finally have a definitive answer! Thanks you so much!

    As I understand it, IF any creditor were to attempt to make me bankrupt, I could ask the court to allow me to apply for a DRO instead as a more suitable course of action. Is beneficial interest with respect to a DRO viewed in the same way as in a bankruptcy case (i.e. presumed to follow legal title)? I would image it would be, but I only ask as you never know in this strange world!!!

    Thanks
    • AnotherJoe
    • By AnotherJoe 26th Jun 19, 4:02 PM
    • 14,939 Posts
    • 17,972 Thanks
    AnotherJoe
    have my wife buy my beneficial interest in the property, rendering me with nothing

    Surely it would give you money, rather than "nothing" and make you more attractive to pursue?

    Also, you'd have transferred a potential BI of yours, which could be argued isn't one, into cold hard cash, again making it more likely you'd be pursued.
    Unintended consequences and all that.
    • Minkym00
    • By Minkym00 26th Jun 19, 4:12 PM
    • 136 Posts
    • 53 Thanks
    Minkym00
    Yes, DROs are covered under the same Act as bankruptcies. Have you checked that you qualify for a DRO?
    • lifeoflearning
    • By lifeoflearning 26th Jun 19, 8:17 PM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    Surely it would give you money, rather than "nothing" and make you more attractive to pursue?

    Also, you'd have transferred a potential BI of yours, which could be argued isn't one, into cold hard cash, again making it more likely you'd be pursued.
    Unintended consequences and all that.
    Originally posted by AnotherJoe
    Yes indeed, in light of the information on BI in the IS Technical Manual, it would seem that I would in fact be creating some assets where there previously would have been none!
    • lifeoflearning
    • By lifeoflearning 26th Jun 19, 8:20 PM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    Yes, DROs are covered under the same Act as bankruptcies. Have you checked that you qualify for a DRO?
    Originally posted by Minkym00
    Actually I just checked this and I wouldn't qualify as my debts would be over 20k when including the recent loan that I have (payments being serviced by my amazing wife for the time being). So if it came to it, it would have to be bankruptcy. Just thought that a DRO would be the preferred option as it doesn't get recorded forever like a bankruptcy does.
    • lifeoflearning
    • By lifeoflearning 27th Jun 19, 11:10 AM
    • 20 Posts
    • 2 Thanks
    lifeoflearning
    Actually, this has given me an idea. Could you tell me if it is sensible:

    There is a 50/50 chance I will receive a CCJ from a pending case (one of the old debts that I have been dealing with). It would seem that other than being over the £20k mark, I would fit the bill for a DRO given that I have no income, savings and don't own a home (as per the beneficial interest issues discussed above). One of the debts is unenforceable, provable by a letter received from the DCA attempting to collect it as the CCA is not present. Not only that, but I also happen to know that it is a merged credit card and overdraft, which is a big no-no from a regulatory point of view; this means that I do not need to list it in a DRO. My existing loan still puts me over the threshold, however, if my wife were to pay it off, I would be under the threshold and could then apply for a DRO. The only issue I see here is the whole preferential payments issue, however according to the IS Technical Manual, the time limit for preferential payments to non-connected parties is only 6 months as opposed to 2 years. As far as I understand also, payments made under a court order, i.e. the CCJ do not count as preferential.

    So, to summarise, if my current loan were paid off, I could continue to meet the obligations of my CCJ and would be able to apply for a DRO 6 months after paying off said loan? Could this be the answer to my problems? Strikes me that if I am going to get a CCJ, my credit will be ruined again for a further 6 years anyway, so I have nothing to lose by going for a DRO and dealing with all my old debt issues once and for all.
    Last edited by lifeoflearning; 27-06-2019 at 11:11 AM. Reason: typo
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