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Joshua
Joshua, Lawyer
Category: UK Bankruptcy Law
Satisfied Customers: 25065
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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If I loaned my ex wife monies for a house purchase how could

Customer Question

If I loaned my ex wife monies for a house purchase how could she ringfence it from me prospectively going bankrupt.

Thanks
Submitted: 1 year ago.
Category: UK Bankruptcy Law
Expert:  Joshua replied 1 year ago.

Joshua :

Thanks for your question. Please kindly RATE my answer when you are satisfied

Joshua :

do you consider there is any present risk of you becoming bankrupt please? Or alternatively, is this simply an academic question at present for the future?

JACUSTOMER-i6phr1u7- :

Hi

JACUSTOMER-i6phr1u7- :

I do not have present knowledge or belief that I will be made imminently bankrupt no

JACUSTOMER-i6phr1u7- :

however I do believe I will be this next 6 months or so

Joshua :

Thanks. When was the loan made please?

JACUSTOMER-i6phr1u7- :

it has,nt been made yet

JACUSTOMER-i6phr1u7- :

I basically have sold a house in Thailand and the monies reside in a reputable thai bank of which I would be transferring to my ex wifes bank account.I have full proof of sale here and its bona fide that it has been derived from a house sale,all done through reputable Thai lawyers and banks.

JACUSTOMER-i6phr1u7- :

I have satisfied myself in relation to the possible tax implications and CGT matters so that is,nt a concern

JACUSTOMER-i6phr1u7- :

for myself or ex wife

JACUSTOMER-i6phr1u7- :

I need to go out now sorry can we pick this up again later

Joshua :

Yes of course. I will post a response you can pick up when you return.

JACUSTOMER-i6phr1u7- :

thxs

Joshua :

the insolvency act provides that any gifts made to third parties may be reversed and called in by your trustee in bankruptcy for up to 5 years from the date those gifts were made

Joshua :

if the money has been loaned to third-party as is the case here from what you say, then the position is different in that this is a debt owed to you and it would not matter when the loan was made because the right to call in the debt transfers to the trustee in bankruptcy once a bankruptcy order is made

Joshua :

the only way to insulate or protect from this happening is either you to make the money a gift to your ex-wife which you probably do not wish to do or to transfer the rights to the debt to a third party whom you trust. however, there can be no agreement between you and that third party that you have rights to that that or your trustee may still potentially make a claim upon it

Joshua :

in either of the above events, were you to carry out either of the above steps, you would need to still allow five years to pass before such steps placed the funds beyond the reach of your trustee in bankruptcy

Joshua :

Is there anything above I can clarify for you?

JACUSTOMER-i6phr1u7- :

So what you are saying is there is no protection available if I am to loan my ex wife money to purchase a house for 5 years,how would the trustee in bankruptcy know I have loaned my ex wife monies they would not unless I declared it,correct,also would there not be added protection if my wife was to buy the house in trust for the kids as beneficarys...

JACUSTOMER-i6phr1u7- :

Thanks

Joshua :

My apologies for the delay in reverting to you. That is correct if you loan monies to your wife or any third party then if you were to be made bankrupt then the benefit of that debt (which you presently own) passes to your trustee. It would make no difference how your wife dealt with the money because no matter what she does she remains indebted to you if you loan the money to her.

Joshua :

The only way to prevent your trustee getting his hands on your right to the debt is to assign the benefit of the debt to a third party either absolutely or in trust (providing that you cannot be anything more than a potential beneficiary of that trust or the trustee will have a right to your interest in the trust too. Consider that 5 years will need to pass until the gift to the trust (if you so chose this route) would be safe from the trustees hands.

Joshua :

If you fail to declare the debt to your trustee this can amount to a criminal offence and if the trustee discovers that you have not disclosed information he can extend the period of bankruptcy. If you were to withhold the information and get away with it then of course this would be practically effective but this is a high risk approach given the above.

Joshua :

Is there anything above I can clarify for you any further?

JACUSTOMER-i6phr1u7- :

Hi

JACUSTOMER-i6phr1u7- :

The money resides in my friends "account" and would be sent to my ex wifes account from there,therefore I cannot see how it can be perceived that I have "loaned" my ex wife the money,the reference and bank paper trail from Thailand if followed back would reflect this.

JACUSTOMER-i6phr1u7- :

I do not see that as any reason to think that the trustee in bankruptcy would therefore have any claim,would that be correct.

JACUSTOMER-i6phr1u7- :

Regards

JACUSTOMER-i6phr1u7- :

Paul.

JACUSTOMER-i6phr1u7- :

Hello

JACUSTOMER-i6phr1u7- :

Hello Joshua

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LL.B (Hons), Higher Prof. Dip. Law & Practice