Orders for Sale

[CS75]

My husband was made bankrupt at the end of 2018 for an old disputed previous business debt by the liquidators. 

 

We have been trying to annul the bankruptcy through a bridge loan against the jointly owned property which is proving difficult as the equity is tight.

 

We used an annulment specialist initially who has now recommended the house goes on the market as they couldn't secure funding. 

We have potentially found another lender ourselves who may help but it's unlikely we can turn it around in time and we are no longer working with the specialist.

It's also very costly to repay but feel it would put us in a better position for future remortgaging if the bankruptcy is annulled. 

 

If we can't secure the funding quickly, has anyone experienced what the trustees will actually do as the OR has said this is the next step? 

I understand they could force a sale and extract huge amounts out in supposed fees, which could be cheaper than continuing with the loan anyway. 

 

As I'm a beneficiary with children, what hope have I got remaining in the home when I can't get the funds alone?

We've considered an IVA but the opposing creditor has the largest proportion of the bankruptcy debt. 

 

We have offered monthly payments as an IPA but they know the equity is potentially available in a lump sum. 

The other issue is our house is leasehold so may not be worth anything on such a short lease

- could this add leverage in our favour?

 

Thanks.

[AndyOrch]

Hi and Welcome to CAG

 

Is the property jointly owned ? 

 

https://www.gov.uk/bankruptcy/your-home

 

https://debtcamel.co.uk/debt-options/bankruptcy/

 

Andy

[CS75]

Yes it is jointly owned. Thanks.

[AndyOrch]

Take a read of the two links above.

[CS75]

Thanks.

 

Should we volunteer to sell or is it the trustees decision only?

 The links say the trustees 'might sell'

- is it likely they will in our case, should we ride it out and see bearing in mind the lease being less than 60 years makes it more difficult to value with the unlikelihood of someone getting a mortgage to buy or is this irrelevant? 

 

There are secured debts to be paid first plus I'm entitled to my share of the equity too. 

Can they just take my husband's share of the equity as a maximum or will they chase him for more when there's no other assets to offer in his name?

[AndyOrch]

Have you actually received anything in writing  from the trustees that this is their intention ?  How do you know that this is likely ?

[CS75]

Hi, thanks for your reply. 

 

Nothing as yet from trustees, it's still with the official receiver but we're going to struggle to get the annulment in place in time (hearing next week) as we can't secure a funder quickly enough nor pay off the creditors in the BR in time.

 

We've just received an offer in principal from a lender subject to their own valuation which I fear will be lower due to the short lease, therefore there's a possibility they could retract their offer.  Most funders we have approached have said there's too much adverse credit and the lease is too short. 

 

As the case has been adjourned twice, the official receiver has said the next step is trustee involvement. 

I am trying to find the least damaging solution and the only lump sum payment we can find (which is what the creditors would only ever accept) is the equity in the house. 

 

Should we offer to sell ourselves or sit tight and see what will happen - is it likely they will order a sale? 

The equity in the house (there is enough to pay off the bankruptcy and OR fees but not much else) is based on the current valuation with a full lease.

 

Will the short lease deter them from ordering a sale given the need to pay secured creditors first and the likely value of the house as it stands - one agent said they would struggle to value the house with the short lease due to the lack of potential buyers? 

 

Sorry I realise it's all ifs and buts,

however I'm just trying to get an understanding of the process with me being a beneficiary with children and wanting us to be free from the upset of this situation.

 

This whole process started from when the limited company was liquidated in 2011 and was a disputed debt which our solicitor at the time encouraged us to fight...but lost the case and inevitably we are now paying the price!

[AndyOrch]

Difficult to even make a guess...a lot of ifs and buts and maybes.... leaseholds can be extended ..

 

 

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/partners-and-bankruptcy/is-your-home-at-risk-if-your-partner-is-bankrupt/

 

[CS75]

Ok thanks for your time

- I guess our future is in their hands at the moment as I can't find a way out otherwise.  

 

We've had a quote for the freehold conversion which again is another large lump sum we can't afford plus legal fees....longing for freedom from this nightmare!

[AndyOrch]

Where the Circumstances are Exceptional 

Where the Insolvency Court finds that the circumstances are ‘exceptional’, the mandatory assumption does not apply. The Insolvency Court’s evaluation of the prescribed s.335A(2) list of matters to be weigh up in the balancing exercise is unconstrained by the mandatory assumption. As Evans Lombe J said in Martin-Sklan, paragraph 9, the Insolvency Court has ‘…a complete discretion…’provided those prescribed matters are had regard to. Those matters are: 

(a) the interests of the bankrupt's creditors,

(b) where the application is made in respect of land which includes a dwelling house which is or has been the home of the bankrupt or the bankrupt's spouse or civil partner or former spouse or former civil partner

(i) the conduct of the spouse, civil partner, former spouse or former civil partner, so far as contributing to the bankruptcy,

(ii) the needs and financial resources of the spouse, civil partner, former spouse or former civil partner, and

(iii) the needs of any children; and

(c) all the circumstances of the case other than the needs of the bankrupt.’

 

https://www.33bedfordrow.co.uk/insights/articles/possession-and-sale-of-bankrupts-home

 

[CS75]

Hi, many thanks for this usual information. 

I've had a read through this document and my children and I would be considered but I can't see our needs being exceptional as moving to a new neighbourhood, school, etc "are all classed as being the usual consequences of a family member’s bankruptcy. They are not exceptional consequences per se in terms of nature or extent". 

[AndyOrch]

It may be the usual information but its the only information in cases as such...see if they do go for an order of sale .....hope for the best prepare for the worst just in case.

[CS75]

Ok thank you. It's likely most if not all of my husband's equity will be absorbed as I understand trustees are very unforgiving when it comes to their fees, will they stop there or try and extract funds another way ie. monthly payments etc or will they finally go away?!

[CS75]

Hi, looking to negotiate with a creditor who has completed a Claim 8 order for sale form to the Court against my husband's share of the equity (3rd charge debt).

 

Hearing has been adjourned to see if a repayment plan can be negotiated with the creditor (on their request and 7 offers have already been declined!) otherwise the Judge would have granted the OFS despite our arguments.

 

Can anyone recommend a solicitor who has been successful in defending a claim or can offer some advice please? Thanks.

[slick132]

Hi CS75,

 

We can't make recommndations for any specific solicitors to assist.

 

However, we will be better placed to offer advice if you can give us some bullet-point data with approx dates, amounts, lenders and other relevant info.

[dx100uk]

old and new threads merged for complete history..

 

dx

 

[CS75]

Thanks for your reply.

 

Amount is approx £33k on a 3rd charge (they hold 1st charge too, mortgage)

Adjourned to at least Jan 2021

 

7 repayment offers made between 2018 to recently, all declined.

Bank suggested we make small payments now until hearing date and whilst discussions take place.

 

Latest offer we made would mean debt repaid in 8 yrs time.

They said it's too long.

 

They have our financial info and believe we can improve offer - should we ask them what is acceptable or revisit ourselves?

Lloyds Bank is creditor - historic business debt (company liquidated) strongly encouraged to personally guarantee

 

Husband was declared bankrupt in Dec 2018 (now discharged) for an overdrawn directors loan account on same liquidated business hence difficulty securing lending to consolidate debts.

 

Please let me know if there is any other info you would like.

 

Thanks for your time.

 

 

 

[dx100uk]

sorry for being dumb or not totally understanding personal guarantees ..but..

 

so lloyds got a CCJ against your OH for the business debt because he was made to sign a personal guarantee?

and then they went for an CO?

 

dx

 

[CS75]

Yes exactly that.

Great business banking manager (not) pushed my husband naively into a corner to sign the personal guarantee on a business overdraft - business now liquidated.

 

Hindsight says the form should never have been signed and the likelihood is, I wouldn't be on this forum right now!

But, it is what it is and we have to now deal with the consequences.

 

Thanks 

[dx100uk]

do you have the wording of the CO from your deeds

i'm just wondering if it's just a restriction K, which might not make any odds if the mortgage is with LLoyds too.

 

if it is, i didn't think a creditor could force a sale if it is a restriction k ...

 

just musing..

 

dx

 

 

 

[CS75]

I will have to look into this,

however we have already attended a telephone hearing with a Judge who was going to put the OFS claim through regardless, so we went for the adjournment option.

 

Unless the Judge doesn't know what he was doing but I'd like to think he did?!  

Not sure why the bank encouraged the adjournment as it was handed to them, only they know the reasons. 

We could probably do with the weight of a lawyer now as I can't bear to be patronised by another Judge or feel so vulnerable.

 

I have found this on another thread about COs and K restriction....

 

A Charging Order can be obtained against jointly owned properties.

 

However, the method of registration differs from an Equitable Charge for one debtor/property owner to a Restriction for one debtor/multiple property owners.

 

In both cases a Charging Order is still obtained and either an Equitable Charge or Restriction can be used to enforce an Order for Sale potentially.

 

[AndyOrch]

It is not possible to register a charging order as an ‘equitable charge’ on a jointly owned property unless all the owners / registered proprietors are judgment debtors. Where only one of the owners / registered proprietors is the judgment debtor, the order will be registered as a ‘restriction.

 

Andy

[CS75]

Hi, thanks for your reply. Can an order for sale be issued following a charge if only one of the joint owners is the debtor?

[AndyOrch]

https://england.shelter.org.uk/legal/home_ownership/order_for_sale

 

https://www.landmarkchambers.co.uk/wp-content/uploads/2018/10/Orders-for-Sale-BEF.pdf

 

https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part73/pd_part73

[CS75]

Thank you for the links.

 

Seems there's nothing stopping them from going for the OFS and the Judge was disinterested in our arguments at the hearing.

 

Not sure how to negotiate payment terms when large lump sums are hard to come by and repayment proposals have been rejected 7 times as they're not prepared to wait too long for their money, no matter how keen we are to get this debt cleared.