Ex husband going bankrupt

[Twinkladdictmum]

My friend's ex husband is going bankrupt. She is renting at the moment, paid for from the equity in the house, which she got in the divorce. He says he is in no position to pay her anything, ir comply with a court order, and she doesnt think she will qualify for any benefits as she still has the equity from the house, in her savings account.
They have 2 kids, he has remarried but was meant to be paying my friend maintenance and child support.
What should she do?

Ex husband i should say.

I think it depends whether she's in a Universal Credit area, or not. Tax credits are only affected by income from savings, but UC I think has a limit. CAB can advise

A bigger problem is that she'll either have to come clean about her ex's tax fiddle, or carry on the fiction that she's been his employee. Which is fraud.

Equity in housing will not be taken into account when making a claim for tax credit. Working 16 hours and more will be taken into account.

Universal credit has an upper limit

Tax credits don't but the money is taken into account, but she can still claim

Universal credit has an upper limit

Tax credits don't but the money is taken into account, but she can still claim

If it was me I'd move and not tell him.

Good luck with that with teenagers that still have contact with their dad.

I agree with pp that she needs to find a job.

But it is him that committed the fraud by paying her that way isnt it? What is the problem to her?

Because earnings are relevant for claims of tax credits, whilst maintenance isn't. So either she drops him in it by telling HMRC what he's been doing, or she plays along, to keep her car etc, and joins in the deception.

He is already neck high in the shit as it is, and this wouldnt make much difference to him but could to her, couldnt it, if her previous "earnings" are disallowed? Is this serious trouble for her then? If it gets out?

The car will go because it is owned by the company, which is now being liquidated.

His half of the equity could well be claimed back by the trustee in bankruptcy as it has happened less than 5 years ago.

If ex gets a job then child maintenance payments will be seen as a legitimate expense and exempt from any earnings he has to pay the trustee. If he doesnt get a job then how can he make maintenance payments? It will be a fiver a week on benefits.

I couldn't guess, company liquidation isn't my field (I'm a family solicitor) so I don't really know how far liquidators go in investigating things like this.

Given that she really didn't have much to gain from this (as opposed to him) hopefully they wouldn't waste time on her if she were co-operative. But, well, if the company has been paying her for nothing, arguably, should they try to recover it from her for the creditors? Perhaps they should.

If she spends the equity, or gives it to te kids or something and simply doesnt have it, would they still come after her?

Yes.

Seriously, it would be a really bad idea. The trustee will be in contact with her soon and explain the situation. She will get to keep half of it though if the house was in her name as well.

And if there is in fact a consent order, the trustee eould have to convince a court to set it aside first.

All this happens even though the ex husband has voluntarily made himself bankrupt and liquidated the business?

What happens to his current wife? Apparently she does very well but it is all cash so her declared earnings are low.

If she spends the equity, or gives it to te kids or something and simply doesnt have it, would they still come after her?

Yes I believe they could

Omg this nightmare just rumbles on! He was a BASTARD to her.

Was the division of equity under a court order?

If not, did she get half of the equity?

If the house was owned as joint tenants in a bankruptcy situation it would be deemed that the wife owned half the equity anyway and a Trustee would only pursue the husband for his share of the property.

I am a bit confused by the mingled use of terminology. Is his (limited) company in liquidation and is he also personally being made bankrupt too or just the company?

If it is the company going into liquidation and he owned the house privately with her then their personal assets do not form part of the company liquidation only the company assets.

If she is being paid a "salary" by the company then that will obviously stop as the company is no longer in existence. The car will belong to the company so the liquidators will take that back to dispose of to pay to creditors. However there is nothing to stop your friend "buying" the car from them at market value.

As regards maintenance and child support if he doesn't have the money now he can't pay it. If it is under a court order and he gets another job he could pursue any arrears at a later stage. However it is more likely that he would apply to the court to vary any order on the basis he does not have the income anymore.

Dont know if the equity split was via a court order. I suspect not.

He has put his limited company, of which he is the majority shareholder, into liquudation AND is becoming bankrupt personally.