Hi there Am seriously considering bankrupcy - due to huge business debts created by my business partner. The only thing stopping me is my flat. My husband paid £40k deposit and i paid only £6k, we have a tenants in common of unequal parts declaration of trust drawn up stating that he will get his £40k back in the event of the sale of the flat. We bought it for £190k and the mortgage on it is £135k. We understand that the current value is approx £170k meaning that my husbands equity is approx £35k (ie less than his original investment). In the event of bankrupcy can they force the sale of the flat even though i have no benefit of interest in it?
Although the tenants in common position us quite commonly used to protect ones position prior to a purchase I am starting to see the Official Receiver challenge these by using external IP's as a trustee.
You need to check the conditions of the mortgage VERY carefully because the mortgage offer ususally is for tennants in common and in equal shares. On this basis alone I have seen a trustee try to posess the house.
you really need to take professional advice and review the position carefully before moving forward.
Hi amanda.bc, The OR will try to work out what your true beneficial interest in the property is. This is based on Original deposit, ongoing contribution to the Household/Mortgage and if a person has made a material improvement to the property (ie if you paid for an extension etc). The Or does sometimes challange a declaration of trust but does so when the DOT has been drawn up to transfer the equity with no consideration or to put it beyond creditors reach. For instance if you had both put 20,000 in the deposit then done the DOT then the OR might challange this. If the DOT reflects the true beneficial interest then i doubt it would be challanged. You would still have a beneficial interest in your case as you did put some deposit down but it would be pro rata on the share you originally contributed. As Reviva says though where a large asset might have a possibility of being at risk you should seek proffesional advice before going bankrupt
Hi there Am seriously considering bankrupcy
Posted - 28 July 2009 : 17:36:41
