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DH Bankrupt-advice on moving

18 replies

Fifteenthnamechange · 20/08/2019 14:25

Hi Mumsnetters
My DH was made bankrupt just over a year ago due to a debt from a previous business. We have a monthly payment arrangement in place. He is the higher earner-I work part time & have a low salary.
We want to move due to living in a bad area, house only a 2 bed so a squeeze with our 2 DC. The house & mortgage is in my name only-always has been as bought before we met.
If I went full time & earned more would it be risky to buy a new house now that we married? I'm aware that the official receiver has 3 years from date of bankruptcy to take action on our house-they have so far indicated they won't-& as the new house would be considered a joint asset due to our marriage it's risky.
Has anyone got any advice/experience?

OP posts:
Nix32 · 20/08/2019 14:43

I'm not sure that the house would have to be a joint asset. The mortgage and the deeds would have to be in your name only. The mortgage company might require him to sign something acknowledging that he has no claim on it.

Fifteenthnamechange · 20/08/2019 15:28

@Nix32 thanks for this. So even if we're married a new home wouldn't necessarily be considered a joint asset?
I'm thinking it would make it easier for official receiver to establish my DH has a beneficial interest in my property though?(if I bought a new house now that we're married, as opposed to current house which I bought before we were together)

OP posts:
Nix32 · 20/08/2019 20:02

Would you need his income to be included in order to get a new mortgage? It's probably worth checking with your current mortgage provider - I'm sure they'd be able to answer your questions, even if they couldn't actually advise you what to do.

Fifteenthnamechange · 20/08/2019 22:13

I think my question is more whether the official receiver is more likely to pursue action on any new house (as it may be easier to establish a beneficial interest if parties are married when House is bought?) rather than mortgage issue @Nix32
Thanks for the reply thoughThanks

OP posts:
bouncydog · 21/08/2019 05:10

There is a bankruptcy thread on www.moneysavingexpert.com which might provide you with more help.

Isleepinahedgefund · 21/08/2019 09:10

Your husband could theoretically accrue a beneficial interest in the new property depending on his contribution. If he is the higher earner and is contributing to the mortgage (whether named or not) then it could be construed that he is accruing a beneficial interest. Being married would make it easier to prove the connection but doesn’t automatically mean that.

HOWEVER:

The new house would be bought post bankruptcy and as such any theoretical beneficial interest would be “after acquired property”, which the Official Receiver can claim. This only applies whilst he is an undischarged bankrupt. If he was made bankrupt over a year ago, he should be discharged by now (automatic after 1 yr, if his discharge was suspended he should know about it). After acquired property is usually things like an inheritance received in the 1 yr period.

It might help to think of bankruptcy in three phases:

before the order is made - all the assets form part of the bankruptcy estate
The year of being an undischarged bankrupt - the Official receiver can claim most assets acquired in this period
After discharge from bankruptcy - the OR no longer has any call on assets acquired after this date.

The monthly payment (income payments agreement) he is making will last for three years, was agreed during the undischarged period but does not extend the bankruptcy past the one year automatic discharge.

It isn’t the potential new house you need to worry about, it’s the current one - you should check with the OR and get confirmation as to whether they intend to pursue your husband’s beneficial interest. If you sell, it makes it easy for them to claim the cash as they will put land reg restrictions on and the conveyancing solicitor will have to give them the money. It usually comes down to a commercial decision though - To be honest if they were going to I think they would have done so by now but you never know - as you say they have three years.

(I did bankruptcy work for quite a few years by the way!)

Fifteenthnamechange · 21/08/2019 21:39

@Isleepinahedgefund thanks so much for that-you can always rely on Mumsnet to provide the advice you need!
So the OR has confirmed that so far they don't plan on taking action on the house, but have another 2 years to do so. I'm guessing it's because that area of law is complicated & therefore expensive so perhaps not worth it. The main debt is to HMRC though & they make me scared as ruthless.
As I said where I live now is causing me issues. If you were me would you chance moving house?ThanksCakeThanks

OP posts:
Surfskatefamily · 21/08/2019 21:42

I would stay put. I used to work in mortgages and back then if you were married you both had to be on mortgage. Firstly you'll get a terrible deal due to his bankruptcy and secondly i don't know but strongly suspect the OR would look at 50% of the equity in new home as husbands assert and pursue

Surfskatefamily · 21/08/2019 21:43

Personally I would sit tight and ride out the 3year period in full.

Surfskatefamily · 21/08/2019 21:44

*spelling issues above due to autocorrect 😒

Fifteenthnamechange · 22/08/2019 09:17

@Surfskatefamily we've had mortgage advice that basically it wouldn't need to be a joint application but that the application could include my husband's monthly income. That's what we'd need to do after the 3 years anyway as his credit will be terrible.
I would still need to increase my income to do this but I have been told it's a possibility.

OP posts:
Allthebubbles · 22/08/2019 09:40

Could you move and rent your house out and rent for the next couple of years?

Fifteenthnamechange · 22/08/2019 10:46

@Allthebubbles I have thought of that but rent even in our area is double/nearly double our mortgage Confused and it's our area that we need to escape!
I'm not sure there is really a solution but wanted to clarify & get some adviceThanks

OP posts:
Isleepinahedgefund · 22/08/2019 21:26

Bankruptcy will affect your husband's credit for six years at least, even though he is discharged. Will be hard to get a joint mortgage.

HMRC can't take any further action with regard to the pre bankruptcy debt.

A bankrupt's beneficial interest in a property they don't own is a bit of a pain in the backside as an asset to recover, unless the owner of the property agreed the sum payable. As you say, expensive and complicated!

RedHelenB · 23/08/2019 13:41

No chance your husbands income can be taken into account without the bankruptcy having a detrimental affect, sorry to break that news to you.

I think hold tight for the next 2 years and then get a mortgage broker to get the best deal for you.

Fifteenthnamechange · 31/08/2019 13:05

Sorry for the delay in replying. Been digesting this & applying to our situation.
@RedHelenB thanks. I'm not expecting it to be easy, or get a prime mortgage but if you have experience/knowledge do you think we would get a mortgage 2 years post discharge?
@Isleepinahedgefund thanks, your advice has really helped & is news to me.
So if I were to sell my house in a year (post bankruptcy but still within 3 yr period where OR could pursue action on my house) & buy a new house in my name which would include equity from my previous house (acquired pre bankruptcy) they could pursue the equity in new house? How would they become aware of this-when my DH notifies them of new address?
Thanks in advance ThanksThanksThanks

OP posts:
Fifteenthnamechange · 31/08/2019 13:07

Also th same question @Isleepinahedgefund if we jointly bought a house in a year?

OP posts:
RedHelenB · 31/08/2019 17:51

Personally I wouldn't even think about until.the 3 years are up.It would be very messy and complicated.

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