Protecting Our House from Creditors

[fakenamefornow]

My husbands firm is in trouble, it will probably survive and collapse is not imminent but I want to protect our family home if I can. The business is a partnership employing about 100 people and the debts would exceed the value of our house.

We moved to this house nearly five years ago and own it jointly with a mortgage of about 20% of its value. It is a normal family home worth about 450K and our only/main asset. We have primary school aged children. The house was bought with the procedures of the sale of our last house and a big chunk of money put in from me. So most of the money to buy it came from me and I have nothing whatsoever to do with the business.

The house is owned jointly and we are married and have been married more than 10 years, so before we bought the house. I don't mind losing the house if we can't pay the mortgage, fair enough, what I don't want is to lose all the equity in the house though because we would then be left with nothing. I work part time in a low paying job.

Any advice will be gratefully received. Thanks

I'm sure there are some knowledgeable people on here (not me!)
But, if I were you, I'd go on the moneysavingexpert website for advice, there will be far more people there who have been through similar things.

Really hope everything works out for you.

Thank you.

I should add that I have been told that if we put the house just in my name the bank can just set this aside and take the house anyway?

Anyone?

If you put it solely in your name because you know the business is in trouble, then yes, it can be reversed, but only via the courts. The bank couldn't do it on their own.

If you had put it in your name earlier, then the bank would not have been able to touch it.

You could try becoming tenants in common, rather than join tenants. A solicitor could draw that up for you, but you could do it yourself. It would enable you to recognise the greater share you put in initially, and make the shares you own larger than what your DH has.

I don't know whether this could be reversed though, I suspect that it is harder to reverse this as your DH would still have an asset that they can go for. The question is whether you could afford to 'buy' him out should the bank go after his share.

I am assuming your husband is definitely personally liable for the business debts That being the case if if the business goes down and he cannot pay the debts he would be bankrupt and his share in the equity in the house would be taken by the trustee to go towards the debts So the house would be sold ,you would get your share and the Trustee would get your husbands share
You might have a claim to the additional money you put in but it's a bit of a long shot and dependent on the circumstances You should take advice on that if / when it come to it Good luck

Yes you could buy out the half share probably for less than the true value as it saves the Trustee time and expense Given the high level of equity thus might be tricky Could family help I am afraid any transfer of title would be set aside

Are they not an llp?

If the worst does happen and the creditors petition for bankruptcy, then all your husband's assets would be passed to the appointed Trustee in Bankruptcy. However, as you jointly own the house, and none of the debts are yours, then your legal interest in the house remains yours and cannot be taken by the Trustee. So, in the event of a forced sale, you will still be entitled to receive your share of the equity in the house from the sale proceeds.

There is nothing to be gained by putting the house into your name only at this stage. Such transactions can indeed be set aside as they are quite obviously an attempt at moving assets out of your husband's name in contemplation of potential bankruptcy.

You also have a beneficial interest in the property because you have a right to live there. This means that the house could not be sold without the Trustee obtaining a court order to do so, and the court would also have to consider the needs of your resident children. Whilst this may delay a sale, after one year the creditors are assumed to have more rights than you and the house could still be sold, but you would be compensated for the loss of your rights out of the sale proceeds.

How many other partners are there in the business? Presumably they are all equally responsible for debts so the burden will be shared to some extent?

Thank you for the reply I do feel a bit more positive. The firm is a LLP.

If we did put the house into just my name and made it to five \two years the house would be safe then wouldn't it? If we didn't make it that long and the bank had the transaction set aside they would still only be able to take his half anyway so we would be no worse off, is that right?

Yes, that's right.

Normally as an LLP he would not be liable for the debts of the business Has he /you signed any personal guarantees

Yes, if it is an LLP, are there any personal guarantees? He shouldn't be nearly as much on the line as a straightforward partnership unless he has.

Yes he has signed personal guarantees, along with the other partners. I haven't signed anything, as I said I have nothing whatsoever to do with the business.

Things actually look at lot worse today, strongly worded letter from the IR about 200k late. They have 60k they can pay now and are going to try to negotiate payment of the rest over the next few months.

Do you know what those guarantees cover and what security they give?

The key is what the guarantees cover. They would normally cover something specific eg bank loan/ overdraftAny claim under the guarantee would only be for what is relates to ,if that makes sense not for all the debts It is good that you have not signed any guarantee as this will protect your share in the house

Thank you all.

One more question.

We have three children, they all have savings accounts, in their own names, that we have a standing order putting a small amount of money in each month, we have been doing this since they were born, they are now 9, 7 and 6. They might have about £10,000 altogether, at the very most. Is this money safe from creditors?