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Stuart J
Stuart J, Solicitor
Category: Law
Satisfied Customers: 22400
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street Practice
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Hi, I have a question about bankruptcy, separation and assets. I

Customer Question

Hi, I have a question about bankruptcy, separation and assets.

I separated from my wife in October 2011, renting an apartment. We put the family house on the market and it sold in July 2012. With the proceeds we bought a new house outright for my wife in July 2012.

I am having some serious financial difficulties with my businesses and I have to decide what to do. If I had to close them down I would personally be liable for the rent of the premises for the remaining 23 months of rent (I had to give a PG), plus a large amount of back rent.

If the landlord comes after me personally, which would probably cause me to go personally bankrupt, is my wife's house safe as her asset or could they go for that too? We have not started divorce proceedings yet.

As a follow up, if I did go bankrupt, there's a possibility that I would go back and live there, not as husband and wife but for me to stay while I got things sorted out. Would that then endanger her house?
Submitted: 3 years ago.
Category: Law
Expert:  Stuart J replied 3 years ago.

Why did you transfer all money to your wife in 2012 if previous house was joint names?

What is house worth and what mortgage is on it?

Children?

Customer: replied 3 years ago.


I didn't transfer all the money to my wife. After paying off the mortgage, we were left with around £290k. We bought her a house for 190k outright, so fully paid for. I had the £100k left, £50k of which went into my businesses, the other £50k going into Barclays as security against a buisness loan, so I can't touch that, except to drawback after payments to the loan are made.


 


We have 2 children but they're 28 and 26, 1 granddaughter who is 5.

Expert:  Stuart J replied 3 years ago.


Thank
you. So you had £100,000 and she had £190,000.

Therefore,
as this transfer was done to a connected person, the disparity is at risk for
five years.



If
you went bankrupt, the trustee in bankruptcy probably lay claim to the £45,000
which is half of the extra that you gave her.



Your
children are out of the equation, as is your granddaughter unless she lives
with your wife under a residence order which you do not mention. I assume not
so therefore she is out of the equation also.



If
you went back to live there, then other than the £45,000 I mentioned earlier,
it would not make any difference.



If,
as part of your divorce proceedings, your wife had been awarded £190,000 by the
court as part of the divorce settlement, then the trustee in bankruptcy would
have no claim on it.



It
could possibly be argued in the divorce that she is entitled to a larger share
than half of the matrimonial home she already had and that is something that
would have to be sorted out with the trustee in bankruptcy depending on what
the court orders.



On
these facts, however, it is unlikely that your wife would have been entitled to
more than the 50% in any event, putting just £45,000 of her house at risk.



If
the trustee in bankruptcy decided to go for that £45,000 she would be faced
with either defending the action or raising the money to pay your equitable
share of the new house (financial) off.



Does
that answer your question? Can I help further?



The
next part is really important for me:



Please
don't forget to positively rate my answer service (even if it was not what you
wanted to hear) and I will follow up any further points you raise for free. If
you don't rate it positively, then the site keep your deposit and I get 0 for
my time. If in ratings you feel that you expected more or it only helped a
little, please ask me for further info before rating me negatively otherwise I
don't get paid at all for my time and answer.

The thread remains open. Thanks

Customer: replied 3 years ago.


Ok, thanks.


 


I have a pension that is worth around £165k. I am taking monthly payments from that, but obviously can't get access to the fund itself.


 


If that value was added to the assets we had, would that not nullify the £45k?

Expert:  Stuart J replied 3 years ago.

Your wife is entitled to probably half of the pension, and the trustee in bankruptcy can take the pension fund into account in many cases.

So, whilst it may increase your assets, in a divorce, she would be entitled to probably 50% of the value.

The situation is that all your assets go into the pot to be divided for divorce purposes.

What thetrustee in bankruptcy looks at is what you have deprived yourself of that could have been used for creditors.

Currently, they have the whole pension to go for and £45,000 in the house.

It would be different if this was part of a court order for divorce where your wife got a bigger share of the house in exchange for not touching your pension.

At this stage, you have not started divorce proceedings and whilst it might be taken into account in those proceedings , it is something that you would have to argue with the trustee in bankruptcy or rather your wife would have to argue with the trustee in bankruptcy .

Customer: replied 3 years ago.


In essence what you're saying is that it's best to get divorced, with a court order stating she has the house, I have the pension, then she's safe?


 


I can argue that my £50k went into the business to help pay creditors and the other £50k securing a loan.

Expert:  Stuart J replied 3 years ago.

That is correct. It would be better to lay it out in an agreement now to wave in front of the trustee in bankruptcy. If this ever becomes an issue your £50,000 into your own business and the £50,000 into the loan is less of a problem, although the trustee can always ask for the money paid into the loan to be returned if it thinks it was done to avoid paying creditors .

It is the transfer to a third party (wife) which they would be more interested in.

Please do not forget to rate to my answer positively or the site keep you your deposit and I get no credit for my time. Thank you

Customer: replied 3 years ago.


Thanks.


 


Just one final quickie. How legal would my agreement with my wife have to be? Could we draft it and both sign it now, or would it have to be done in a legal fashion and/or as part of a divorce?

Customer: replied 3 years ago.


Didn't get an answer to my final question, which was:-


 


Just one final quickie. How legal would my agreement with my wife have to be? Could we draft it and both sign it now, or would it have to be done in a legal fashion and/or as part of a divorce?

Expert:  Stuart J replied 3 years ago.

There is no reason why it cant be done between you but it isnt absolutely binding. Better if by court order because that is binding largely BUT the TIB can still ask court to overturn it if the TIB can prove it was agreed to defraud creditors.

A court order is as good as you can egt

Stuart J, Solicitor
Category: Law
Satisfied Customers: 22400
Experience: PGD Law. 20 years legal profession, 6 as partner in High Street Practice
Stuart J and other Law Specialists are ready to help you
Customer: replied 3 years ago.


Just noticed the times of the responses are Eastern Standard Time, which obviously tells me something is coming from USA. Is that correct?

Expert:  Stuart J replied 3 years ago.
I am in Cheshire but the site is hosted in San Francisco. I am an English qualified solicitor
Customer: replied 3 years ago.


Ok, thanks for your help.


 


I'd have thought they'd show Pacific time if the site's hosted in SF. Anyway, doesn't matter. Might be something the site might want to look at though as people may think they're talking to an American lawyer.

Expert:  Stuart J replied 3 years ago.
It probably only crops up one in 100 cases, but well spotted.

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