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Can I Sell My House And Give My Wife All The Equity And Go Bankrupt?

Question:

I owe £75k, in 2 unsecured loans and 4 credit cards, and next month will be on a negative in terms of disposable income. We are selling the house, this is a joint mortgage. I have agreed that my wife (and daughters) can keep all of the equity to be able to buy a smaller place, as we have split up. When the house is sold I will let my wife keep all the cash and buy her new place then I will declare bankruptcy.

Once I start defaulting payments will any of my creditors be able to stake a claim on the property and/or equity? I can’t put my wife and daughters in danger of losing a home because of my mistakes. Any information gratefully appreciated.

Answer:

In bankruptcy the forms ask for any property transfers or sales going back a few years; this will then be questioned by the Official receiver in your bankruptcy.

It is possible for the OR, if they feel you have tried to hide or manipulate an asset, to reverse these transactions, meaning they can request your half of any equity from the sale of the property.

This would either place your wife in the position of having to come up with your half of the equity to pay to the OR for the bankruptcy, or the OR can have the property sold to pay your half of any equity into the bankruptcy.

It is always advisable to not move, sell, or transfer any assets prior to going bankrupt.

If you decide to not go bankrupt, you could look at an IVA or a Debt Management Plan if you can qualify or can afford to do so.

If you just default on the debts, your creditors will chase you for payments, possibly seeking CCJ’s, and then if they decide to, could look at a charging order against any property in your name, or making you bankrupt.

Depending on the amount of any equity you have in the property maybe a way to settle or pay off the debts.

Thank you for letting me help you.

Jon

If you have a bankruptcy question you’d like to ask, just ask using this online form. All help is free.