Bankruptcy - Legal Advice
Discussion
I would recommend that you find a licenced insolvency practitioner for a bit of advice.
Most will give a free half hour to explore if there's anything to be done.
It's a specialist area, and while I am an accountant I am not licenced to give advice on this.
You may need to get written permission from your parents to do this, however.
The other thought that crossed my mind on reading this is to check that, if the house is owned jointly by both parents, that your mother actually signed the debt paperwork, and had had the risks explained to her before she signed it.
There was a case along these lines a while back where a bank lending money in circumstances like this just gave the paperwork to the husband to get it signed by his wife, and he stuck in front of her and said "sign this please" without explaining to her that her home was at risk if it all went belly up. Inevitably it did, and she successfully fought the bank when they tried to take possession of the house. As she owned half of it, they couldn't force her to sell.
Most will give a free half hour to explore if there's anything to be done.
It's a specialist area, and while I am an accountant I am not licenced to give advice on this.
You may need to get written permission from your parents to do this, however.
The other thought that crossed my mind on reading this is to check that, if the house is owned jointly by both parents, that your mother actually signed the debt paperwork, and had had the risks explained to her before she signed it.
There was a case along these lines a while back where a bank lending money in circumstances like this just gave the paperwork to the husband to get it signed by his wife, and he stuck in front of her and said "sign this please" without explaining to her that her home was at risk if it all went belly up. Inevitably it did, and she successfully fought the bank when they tried to take possession of the house. As she owned half of it, they couldn't force her to sell.
Dynamoduck said:
a sizeable debt which he had taken out against our house . My parents have been ordered to attend court next month regarding the house and debt
Easiest/cheapest place to start is check the Land Registry title of their property to see if there's a "Charge" registered against it in respect of the loan. Use this link and expect to pay c.£3 for a download of the title. https://search-property-information.service.gov.uk...
If there is a Charge registered you may also be able to download a copy of the full loan document for a further small fee.
This is NOT a recommendation but I know someone who was deep in it and they went to Bell and co, they no doubt charge but I can tell you the guy kept his house when all the signals were he’d lose it.
I think they are sort of debt management but maybe they do a free consultation
They are in Northern Ireland but work in the UK
Whatever happens if nothing else turn up at whatever court appointments and at least make a case but it would seem like there has been more correspondence than you know about.
The other post about what was signed and who owns what is very important
As I say not a recommendation on Bell and co but if you search at least it might be a port of call
I think they are sort of debt management but maybe they do a free consultation
They are in Northern Ireland but work in the UK
Whatever happens if nothing else turn up at whatever court appointments and at least make a case but it would seem like there has been more correspondence than you know about.
The other post about what was signed and who owns what is very important
As I say not a recommendation on Bell and co but if you search at least it might be a port of call
As already said, take advice from a licensed IP. There is a difference between being bankrupt (when any property interests are an asset in the bankruptcy estate) and action being taken by a creditor who has been given security in the form of a mortgage/charge.
While courts generally recognise family interests there is a point in bankruptcy where creditors get priority. If this is a bankruptcy then the Trustee has to deal with any interest vesting in the estate within 3 years or lose the opportunity (so creditors look to his PI cover instead).
I am an IP doing that type of work but am currently travelling and then heading to Le Mans. If it can wait until after that I’d be happy to give some general advice. If it needs more than that then you are looking at formally engaging someone which will then involve costs. I’d suggest finding a local IP and speaking to them asap, once court dates are set time is usually of the essence.
While courts generally recognise family interests there is a point in bankruptcy where creditors get priority. If this is a bankruptcy then the Trustee has to deal with any interest vesting in the estate within 3 years or lose the opportunity (so creditors look to his PI cover instead).
I am an IP doing that type of work but am currently travelling and then heading to Le Mans. If it can wait until after that I’d be happy to give some general advice. If it needs more than that then you are looking at formally engaging someone which will then involve costs. I’d suggest finding a local IP and speaking to them asap, once court dates are set time is usually of the essence.
Thank you everyone for the advice, I'm going to contact an insolvency practitioner but I'll have to be careful of costs as it looks like I'll be footing the bill for it myself.
Qbee - That's a good point about the husband and wife, from what my mum has told me she was guilt tripped into co-signing the loan and I highly doubt my dad properly explained what she was signing to her so that's definitely something I could use
Panamax - Thank you for that link, I'll have a look at that
Dave A8 - Yes there's been quite a bit of correspondence over the last few years but it's only the most recent documentation I've been able to see for myself as my dad is the sort of person who tries to hide problems rather than sort them out. I won't say the figure but it is substantial and if Bell and Co have helped someone else in a similar position then it's worth a try contacting them, Thanks.
James P - Thank you for that advice, as far as I understand, family issues can have an impact on the outcome but with the size of the debt and the fact that my parents have no savings I'm doubtful there's much I can do to save the house. The court date is in 28 days so if you have any free time between now and then and don't mind sparing a bit I'd really appreciate any help you can offer, hope you enjoy your trip to Le Mans
Qbee - That's a good point about the husband and wife, from what my mum has told me she was guilt tripped into co-signing the loan and I highly doubt my dad properly explained what she was signing to her so that's definitely something I could use
Panamax - Thank you for that link, I'll have a look at that
Dave A8 - Yes there's been quite a bit of correspondence over the last few years but it's only the most recent documentation I've been able to see for myself as my dad is the sort of person who tries to hide problems rather than sort them out. I won't say the figure but it is substantial and if Bell and Co have helped someone else in a similar position then it's worth a try contacting them, Thanks.
James P - Thank you for that advice, as far as I understand, family issues can have an impact on the outcome but with the size of the debt and the fact that my parents have no savings I'm doubtful there's much I can do to save the house. The court date is in 28 days so if you have any free time between now and then and don't mind sparing a bit I'd really appreciate any help you can offer, hope you enjoy your trip to Le Mans
Edited by Dynamoduck on Thursday 1st June 22:09
You titled the thread "bankruptcy" but presumably nobody is going bankrupt here.
I assume,
The company went bust (involuntary winding up), and
The bank is chasing guarantors (your folks) for repayment of the bank's loan to the company, and
If/when the house is sold there would be some cash left over in the hands of your folks.
Or does the loan exceed the value of the house, in which case the bank might proceed to petition for bankruptcy as well if they think there are other assets around?
Practical question: Can the family scrabble about and find enough cash to pay off the bank? If the house has to be sold there will be additional costs claimed left, right and centre, including the legal costs of recovery/enforcement.
Lesson: Never, never, never pledge your home against a business loan. If the business collapses you'll lose both your livelihood and your home.
I assume,
The company went bust (involuntary winding up), and
The bank is chasing guarantors (your folks) for repayment of the bank's loan to the company, and
If/when the house is sold there would be some cash left over in the hands of your folks.
Or does the loan exceed the value of the house, in which case the bank might proceed to petition for bankruptcy as well if they think there are other assets around?
Practical question: Can the family scrabble about and find enough cash to pay off the bank? If the house has to be sold there will be additional costs claimed left, right and centre, including the legal costs of recovery/enforcement.
Lesson: Never, never, never pledge your home against a business loan. If the business collapses you'll lose both your livelihood and your home.
Panamax said:
You titled the thread "bankruptcy" but presumably nobody is going bankrupt here.
I assume,
The company went bust (involuntary winding up), and
The bank is chasing guarantors (your folks) for repayment of the bank's loan to the company, and
If/when the house is sold there would be some cash left over in the hands of your folks.
Or does the loan exceed the value of the house, in which case the bank might proceed to petition for bankruptcy as well if they think there are other assets around?
Practical question: Can the family scrabble about and find enough cash to pay off the bank? If the house has to be sold there will be additional costs claimed left, right and centre, including the legal costs of recovery/enforcement.
Lesson: Never, never, never pledge your home against a business loan. If the business collapses you'll lose both your livelihood and your home.
From what I can tell, my dad filed for bankruptcy a while back and the bank are now attempting to get their money back through the sale of the house. The house is fully paid off with no mortgage and the value of the house exceeds the total value of the remaining loan. It gets complicated as the business he had was shared with a partner so I don't know how much of the loan my dad is responsible for paying but that is a general overview of the situation.I assume,
The company went bust (involuntary winding up), and
The bank is chasing guarantors (your folks) for repayment of the bank's loan to the company, and
If/when the house is sold there would be some cash left over in the hands of your folks.
Or does the loan exceed the value of the house, in which case the bank might proceed to petition for bankruptcy as well if they think there are other assets around?
Practical question: Can the family scrabble about and find enough cash to pay off the bank? If the house has to be sold there will be additional costs claimed left, right and centre, including the legal costs of recovery/enforcement.
Lesson: Never, never, never pledge your home against a business loan. If the business collapses you'll lose both your livelihood and your home.
There is no chance whatsoever of us getting the money to pay off the bank, my dad has known about this for years now and if he was smarter with his money we might've been able to save enough to pay a chunk of it off but he seems to spend everything he earns and he's always been the same. It's definitely a lesson that will stick with me for the rest of my life as no one my age should be dealing with the stresses involved with this sort of thing, I should be setting up the start of my own life!
Edited by Dynamoduck on Thursday 1st June 22:59
Avantime said:
Take the advice above.
Various things to consider -
Is there currently a mortgage on the property/ how much equity vs the size of loan? If there's lots of equity, would some form of equity release be an option?
Good luck to you!
There's no mortgage, the house is paid for. I've brought it up with my Mum about re-mortgaging the house to pay the debt but that's something she would need to look into, I don't fully understand how it would work but it's the only idea I've had that would come up with the sort of money needed to prevent us from losing our house and as mentioned before having very little money left over after legal fees are deducted.Various things to consider -
Is there currently a mortgage on the property/ how much equity vs the size of loan? If there's lots of equity, would some form of equity release be an option?
Good luck to you!
Dynamoduck said:
There's no mortgage, the house is paid for. I've brought it up with my Mum about re-mortgaging the house to pay the debt but that's something she would need to look into, I don't fully understand how it would work but it's the only idea I've had that would come up with the sort of money needed to prevent us from losing our house and as mentioned before having very little money left over after legal fees are deducted.
The other possible difficulty, apart from the comment made before mine, is that your parents would have to have sufficient income to cover the mortgage affordability parameters.I had a client years ago who did the same, borrowed for the business secured against their house. The business ran into cashflow difficulties and their high street bank decided to call in the security, despite the fact that the company had a major contract with British Airways for airport turnaround vehicles (the things with a scissor lift that deliver fresh supplies to the aircraft) all but signed.
The bank started the legal process, and a week before the conclusion BA signed the contract. Would the bank change their mind? Would they hell. Far more interested in getting their money back. This particular bank were famous for this in the 1980s and 1990s - first to lend, first to foreclose.
On the positive side, the family moved into rented accomodation, and got determined. The father set himself up as a consultant, working from home (he was an engineeer by profession) and designed anything and everything that came along. By the time he became my client he was back earning a decent income. In time they were able to buy another house and get over it, but they never foregave the bank.
This may be the end of a phase in your parents' lives, but it is only the end of more than that if they let it be. Ifg they cannot sort a re-financing then they need to move on if they can.
I’m not trying to be negative but as for your mum being guilted into it, unless it was done in the very dim and distant past, it’s highly probable that the lender will have insisted that she have had independent and separate legal advice from your father. Again records related to any advice are crucial.
The reality is the lender wants money, not your house unless they really have to, you ( I use that collectively) have a window to get your thoughts together before this case, it is probably last chance saloon, so make it count.
Your father needs to understand the time for denial or regret is done, if this is at least actively managed you will find events moving against you. Try to at least get your dad to see that this is also in part a logistical matter and get him to focus on at least managing things where he can.
I hope you find someone to give specific direction about the case
The reality is the lender wants money, not your house unless they really have to, you ( I use that collectively) have a window to get your thoughts together before this case, it is probably last chance saloon, so make it count.
Your father needs to understand the time for denial or regret is done, if this is at least actively managed you will find events moving against you. Try to at least get your dad to see that this is also in part a logistical matter and get him to focus on at least managing things where he can.
I hope you find someone to give specific direction about the case
Dynamoduck said:
From what I can tell, my dad filed for bankruptcy a while back and the bank are now attempting to get their money back through the sale of the house. The house is fully paid off with no mortgage and the value of the house exceeds the total value of the remaining loan. It gets complicated as the business he had was shared with a partner so I don't know how much of the loan my dad is responsible for paying but that is a general overview of the situation.
There seems to be a lot of missing information.Edited by Dynamoduck on Thursday 1st June 22:59
If the 'company' was a limited company then the loan was likely made to the company with your parent's home as collateral. Your father was a shareholder along with the other person. Does the other shareholder have a similar issue? As others have commented we would need to know the terms of the agreement entered into.
If the 'company' was not a limited company, but was a partnership then the situation is different. Each partner is 'jointly and severally liable' for the debts of the business.
OP:
I understand why you think you need to get involved and do what you can to help, but there is another perspective:
This is your parents' problem. They are adults who have put themselves in this situation. It is not your problem to resolve. Leave them to it and get on with your life. It is not your responsibility.
I understand why you think you need to get involved and do what you can to help, but there is another perspective:
This is your parents' problem. They are adults who have put themselves in this situation. It is not your problem to resolve. Leave them to it and get on with your life. It is not your responsibility.
this is my username said:
OP:
I understand why you think you need to get involved and do what you can to help, but there is another perspective:
This is your parents' problem. They are adults who have put themselves in this situation. It is not your problem to resolve. Leave them to it and get on with your life. It is not your responsibility.
I completely agree with you, however, I am still living at home with them and can't afford to move anywhere on an apprenticeship salary so if we lose the house it will massively impact me too.I understand why you think you need to get involved and do what you can to help, but there is another perspective:
This is your parents' problem. They are adults who have put themselves in this situation. It is not your problem to resolve. Leave them to it and get on with your life. It is not your responsibility.
Dynamoduck said:
From what I can tell, my dad filed for bankruptcy a while back and the bank are now attempting to get their money back through the sale of the house. The house is fully paid off with no mortgage and the value of the house exceeds the total value of the remaining loan.
Strange.I hope your Dad is getting proper guidance from somewhere, even if only Citizens Advice.
MustangGT said:
There seems to be a lot of missing information.
If the 'company' was a limited company then the loan was likely made to the company with your parent's home as collateral. Your father was a shareholder along with the other person. Does the other shareholder have a similar issue? As others have commented we would need to know the terms of the agreement entered into.
If the 'company' was not a limited company, but was a partnership then the situation is different. Each partner is 'jointly and severally liable' for the debts of the business.
I'll have a look tonight at whether it was a partnership or limited company but I can say that yes the other shareholder has similar issues and is involved in the process. I was told that despite the fact that it was a partnership and both partners were responsible for the debt, we might have to pay more due to us having more assets than the other party.If the 'company' was a limited company then the loan was likely made to the company with your parent's home as collateral. Your father was a shareholder along with the other person. Does the other shareholder have a similar issue? As others have commented we would need to know the terms of the agreement entered into.
If the 'company' was not a limited company, but was a partnership then the situation is different. Each partner is 'jointly and severally liable' for the debts of the business.
As others have said, your parents really need to speak to an Insolvency Practitioner.
If someone asked me who I'd recommend, it would be these guys;
https://www.theinsolvencycompany.co.uk/
No vested interest. I just know them and I'm sure they'd have a no-obligation chat with your folks first.
It would be silly for them not to talk to an expert if they're about to lose the roof over their heads.
If someone asked me who I'd recommend, it would be these guys;
https://www.theinsolvencycompany.co.uk/
No vested interest. I just know them and I'm sure they'd have a no-obligation chat with your folks first.
It would be silly for them not to talk to an expert if they're about to lose the roof over their heads.
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