Bankruptcy Implications
Discussion
Reaching out to the wealth of knowledge here on PH for some assistance.
Whilst she is seeking Legal advice, my friends Solicitor is on holiday until Monday so I'm hoping some PH guidance might help keep the situation calm for the next three days and also allow her to be armed with solid questions and thoughts ahead of the call with the lawyer on Monday.
Summary of issue is -
My friends ex-husband (currently in prison to complicate matters further) has been advised by his Sols to file for bankruptcy and he thinks this is a great idea.
Unfortunately the ex-husband is on the deeds and mortgage along with my friend for the house she and his 2 young children live in. She purchased the house originally, then added him when they got married.
There have been papers issued to him and his Solicitor for him to sign several weeks ago that transfers the deed and mortgage back to her and he is claiming that he has already signed them but his Solicitor seems to be holding on to them and is failing to release them.
My understanding is that as pat of the Divorce settlement the house and any equity in it was going back to her given his inability to pay any sort of maintenance etc. £190k House £70k Equity and by all accounts majority of mortgage and bills always paid by my friend anyway.
We believe his total debts run to around £50k.
So we would really welcome some informed help on what she should be directing her Solicitor to be trying to do on Monday and any feedback on how much or how little her home is exposed and what she can do to mitigate this?
I promise to update the thread with any outcomes and heed the professional advice given rather than argue they're wrong because its not what I want to hear. Thank you in advance.
Whilst she is seeking Legal advice, my friends Solicitor is on holiday until Monday so I'm hoping some PH guidance might help keep the situation calm for the next three days and also allow her to be armed with solid questions and thoughts ahead of the call with the lawyer on Monday.
Summary of issue is -
My friends ex-husband (currently in prison to complicate matters further) has been advised by his Sols to file for bankruptcy and he thinks this is a great idea.
Unfortunately the ex-husband is on the deeds and mortgage along with my friend for the house she and his 2 young children live in. She purchased the house originally, then added him when they got married.
There have been papers issued to him and his Solicitor for him to sign several weeks ago that transfers the deed and mortgage back to her and he is claiming that he has already signed them but his Solicitor seems to be holding on to them and is failing to release them.
My understanding is that as pat of the Divorce settlement the house and any equity in it was going back to her given his inability to pay any sort of maintenance etc. £190k House £70k Equity and by all accounts majority of mortgage and bills always paid by my friend anyway.
We believe his total debts run to around £50k.
So we would really welcome some informed help on what she should be directing her Solicitor to be trying to do on Monday and any feedback on how much or how little her home is exposed and what she can do to mitigate this?
I promise to update the thread with any outcomes and heed the professional advice given rather than argue they're wrong because its not what I want to hear. Thank you in advance.
If he declares himself bankrupt the Official Receiver will likely deal with the bankruptcy.
The OR has the powers to ignore recent financial disposals if they believe they were undertaken to avoid it being included in the bankruptcy.
If the interest in the house is the only asset he has, the OR will likely seek to do a deal with the joint owner to buy out the bankrupts interest. So worst case, £35,000 but I would guess the OR would settle for less rather than go to court to force a sale.
The OR has the powers to ignore recent financial disposals if they believe they were undertaken to avoid it being included in the bankruptcy.
If the interest in the house is the only asset he has, the OR will likely seek to do a deal with the joint owner to buy out the bankrupts interest. So worst case, £35,000 but I would guess the OR would settle for less rather than go to court to force a sale.
PurpleMoonlight said:
If he declares himself bankrupt the Official Receiver will likely deal with the bankruptcy.
The OR has the powers to ignore recent financial disposals if they believe they were undertaken to avoid it being included in the bankruptcy.
If the interest in the house is the only asset he has, the OR will likely seek to do a deal with the joint owner to buy out the bankrupts interest. So worst case, £35,000 but I would guess the OR would settle for less rather than go to court to force a sale.
Thank you for the feedback and hopefully you wont mind if I raise a couple of follow up questions.....The OR has the powers to ignore recent financial disposals if they believe they were undertaken to avoid it being included in the bankruptcy.
If the interest in the house is the only asset he has, the OR will likely seek to do a deal with the joint owner to buy out the bankrupts interest. So worst case, £35,000 but I would guess the OR would settle for less rather than go to court to force a sale.
My understanding is that the House ownership transfer was formally agreed as part of the divorce proceedings many months ago but her Solicitor had been trying to have the matter addressed amicably rather than forcing the transfer through the courts.
Do you think this would make any difference?
My understanding is that the house equity would indeed be the only asset he has.
Given that my friend doesn't have any cash herself, would the OR be able to force through a sale of the property given its home to a 6 and 9 year old or would they put a charge on the property to recover the £35k when it was sold? and what would happen if house prices dropped and it sold for £170k in say two years time?
Myc said:
Thank you for the feedback and hopefully you wont mind if I raise a couple of follow up questions.....
My understanding is that the House ownership transfer was formally agreed as part of the divorce proceedings many months ago but her Solicitor had been trying to have the matter addressed amicably rather than forcing the transfer through the courts.
Do you think this would make any difference?
My understanding is that the house equity would indeed be the only asset he has.
Given that my friend doesn't have any cash herself, would the OR be able to force through a sale of the property given its home to a 6 and 9 year old or would they put a charge on the property to recover the £35k when it was sold? and what would happen if house prices dropped and it sold for £170k in say two years time?
A divorce financial agreement not ratified by the Court is a worthless piece of paper.My understanding is that the House ownership transfer was formally agreed as part of the divorce proceedings many months ago but her Solicitor had been trying to have the matter addressed amicably rather than forcing the transfer through the courts.
Do you think this would make any difference?
My understanding is that the house equity would indeed be the only asset he has.
Given that my friend doesn't have any cash herself, would the OR be able to force through a sale of the property given its home to a 6 and 9 year old or would they put a charge on the property to recover the £35k when it was sold? and what would happen if house prices dropped and it sold for £170k in say two years time?
The OR could apply for sale, they might get it they might not. They would be unlikely to be willing to wait for several years. The courts put people with children on the streets every day, they are not a win all get out clause.
Thank you for your further feedback.
I certainly wasn't suggesting having kids meant she could live her life without consequence, other than the mortgage she doesn't have a single pound on credit so is very conscientious with money but has sadly trusted her Solicitors and the processes they tell her to follow and now 3 years after divorcing the guy faces losing her home.
I in no way advocate people avoiding paying the debt they owe but in this instance feel my friend rightly or wrongly is probably being unfairly penalised and would like to minimise this as much as possible.
If she can evidence the deposit she paid towards the house and his minimum contributions towards it (she was initially the single owner of the property and they divorced 3 years ago and has never received any money from him since) could this reduce the proportion of the equity the OR would pursue?
I certainly wasn't suggesting having kids meant she could live her life without consequence, other than the mortgage she doesn't have a single pound on credit so is very conscientious with money but has sadly trusted her Solicitors and the processes they tell her to follow and now 3 years after divorcing the guy faces losing her home.
I in no way advocate people avoiding paying the debt they owe but in this instance feel my friend rightly or wrongly is probably being unfairly penalised and would like to minimise this as much as possible.
If she can evidence the deposit she paid towards the house and his minimum contributions towards it (she was initially the single owner of the property and they divorced 3 years ago and has never received any money from him since) could this reduce the proportion of the equity the OR would pursue?
Myc said:
If she can evidence the deposit she paid towards the house and his minimum contributions towards it (she was initially the single owner of the property and they divorced 3 years ago and has never received any money from him since) could this reduce the proportion of the equity the OR would pursue?
That would be part of the negotiation with the OR.Her ex doesn't automatically have a 50% interest in the house. Lots of other factors come into play. Where there is a dispute a Judge would decide and I doubt the OR would be willing to go that far for what is relatively a small amount of money. My guess is they would settle for a lot less than £35,000.
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