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I was made bankrupt in 2010 and am now discharged. The banruptcy…

Customer Question
I was made bankrupt in...
I was made bankrupt in 2010 and am now discharged. The banruptcy trustee took out a charge on my property, but because of subsidence that is currently worthless.
I did not contribute anything to the property for nearly twenty years ie. my wife paid the mortgage and all the bills.
My business took all my resources and eventually went down because of the economic situation and lack of support from the banks.
My wife offered 1p for my interest in the property nad the trustee acknowledged this last year but will no longer communicate with us. The house is being rebuilt under the insurance and we want the charge lifted and if necessary are prepared to take the trustee to court.
We sent him proof that my wife had been paying everything for years.
Submitted: 6 years ago.Category: UK Bankruptcy Law
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Answered in 25 minutes by:
2/20/2012
Solicitor: Joshua, Lawyer replied 6 years ago
Joshua
Joshua, Lawyer
Category: UK Bankruptcy Law
Satisfied Customers: 26,070
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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Joshua :

Welcome to JustAnswer! If you've queries once you've read my answer do ask. When satisfied, please kindly click the Green ACCEPT button

Joshua :

Will there be sufficient equity i the property to pay off the remaining interest to creditors once the work is finished please?

Customer:

The issue is not whether there will be any equity to pay the creditors as there would never be sufficient. My question is does the trustee have the right to hold a charge on the property as my wife is the only one that has been contributing to the property for about twenty years and her contributions far outweigh my share of the equity.

Joshua :

The position is that the trustee in bankruptcy will have a claim against your share of the property only

Joshua :

He has no claim against your wifes share.

Joshua :

If you own the propery jointly in the absence of any written agreemet to the contrary the starting point for assessing your respective shares will be 50/50 but you could seek to shift this in your wifes favour potentially.

Joshua :

If you are joint owners, the trustees interest should have been registered as a restriction and this only ipacts on your share of the property. He has no claim against the property as a whole.

Joshua :

However a charging order can survive indefinately and accordingly the trustee can wait out until the property works are finished before deciding to try to exercise his security.

Joshua :

Your wife can extract her share of the property at any time by virtue of an application to the courts if the trustee refuses to cooperate but he will still no doubt make a claim against any proceeds of sale.

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Customer reply replied 6 years ago

I do not think that you understand my question! I want to know if we are within our rights to threaten the trustee with legal action as I have not contributed to the house for twenty years, and we believe that my wife is entitled to any equity that exists. I believe that there is a case in point where the non-bankrupt took the trustee to court to have the charge and consequently forced sale annulled.

 

Jim

Solicitor: Joshua, Lawyer replied 6 years ago
Thanks I do fully understand the point you are making. The issue you will have so far as I can see is convincing ultimately a court that you have little or no equity in the property.

Certainly the trustee cannot claim any equity that is found to belong to your wife. The issue is that your wife will need to objectively prove that she owns most or all of the equity in the property.

When you bought the property unless you entered into some form of trust deed or other agreement the starting point is that you own the property 50/50. It is fairly difficult though not impossible to depart from this presumption but you would need to show that you either made an agreement that you would own the house other than 50/50 when you bought it or that your wife did not intend the monies she has paid into the house to be anything other than monies that should be applied to her share of the property.

If she can demonstrate this then she could seek to remove the charge. The trustee will no doubt argue that you have a 50% share in the property though and it is this argument that you will need to counter in order to succeed.
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Customer reply replied 6 years ago

I have read on the internet of a case in point but would this stand up in court. We have e-mailed the trustee on numerous occasions and sent him proof that my wife has been paying everything. She offered to purchase my interest in the property, which obviously the trustee holds, for 1p, which under the circumstances was fair. As the house has major subsidence it was valued at £80,000 against a mortgage of £233,000, but the trustee is aware that we have an ongoing claim with our insurers to have the property rebuilt.

The works are proceeding at the moment but I would like to try to force the trustee's hand. I do not believe that he acted correctly as he applied a charge to the house immediately without being aware of the full facts of the case.

How much would it cost me to send him a legal letter to put him under a little pressure to make a decision.

My 50% share in the property must be diminished by the fact that my wife has paid the mortgage and all the bills for many years.

Solicitor: Joshua, Lawyer replied 6 years ago
What case are you referring to please?
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Customer reply replied 6 years ago

I will have to look the internet again. I found one three months ago or so when I was researching, where the non-bankrupt contested the trustee's attempt to force a sale of the jointly owned property; took the trustee to court on the basis that she was the sole contributor to the mortgage, council tax and upkeep of the property and won the case. The court awarded in her favour and ruled that the bankrupt and therefore the trustee had no entitlement to any of the equity in the property as her contributions outweighed 50% of the equity that he would have been entitled to under equal contributions.

The charge that the trustee held had to be lifted removing any entitlement that he ahd on behalf of the creditors.

When I find it again I will give you the reference!

Solicitor: Joshua, Lawyer replied 6 years ago
Thanks. I would not disagree with that outcome at all providing your wife can show that there was no intention on her part to give you credit for the contributions she has made. You should not expect the trustee to simply accept this and you should underestimate the difficulty of departing from the shares provided for on the transfer.

The courts will have regard for what it believes was the intentions of the parties. If one party claims a larger share of the beneficial interest it is for that party to produce evidence to show that the original intention of an equal split of the beneficial interest has changed or did not accurately reflect the intentions at the date of purchase.

The leading case on this is Kernott v Jones 2010. THis case decide that a presumption of 50/50 can be shifted if one party can show by reference to financial evidence that they have contributed exclusively or mainly to the property and that there was no intention on in this case your wife's part to make a gift of any part of such contributions to you. This is not easy but if she can show that she has kept her finances separate from you and led quite separate financial lives this would be a good start.

I should be grateful if you would kindly remember to click ACCEPT.
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Customer reply replied 6 years ago

We have no problem proving that there was no intention on my wife's part to make a gift or contribution to me. Her finances have always been separate to mine and, fortunately she is very meticulous. I had no intention of going down the pan (my business owned a site with planning permission for 6 three bed houses and I had arranged to borrow £650,000 to do the development myself). The return was forecast at £1.1m

The bank pulled out on me after signing all the agreements and attending the initial site meeting, leaving me high and dry as the builder had demolished my premises on their say-so. The builder threatened me with all sorts including violence against my person.

I had credit protection and insurance all over the place and presented two cases to the FSA; both of which failed. Once a banker always a banker if you do not might my saying so.

The question still is (bearing in mind that my wife has sent nearly twenty years of her financial statements to the trustee) how do we proceed with a case against him.

Customer reply replied 6 years ago

Your reference to KernottvJones does not quite apply in our case, as my wife and I have lived together since 1973 and been married since 1979. I am sure that I found a case where the couple were married, one became bankrupt (the trustee then tried to sell the house to release the equity and claim half for the creditors or more likely his fees), and the non-bankrupt took the case to court as they had been the sole contributor over many years.

The judge decided in favour of the non-bankrupt and the trustee lost the case.

I would like to cite that and take the trustee to court to have the charge against the property lifted.

Solicitor: Joshua, Lawyer replied 6 years ago
The only case I can find that reflects this at all are the case of Re Lorraine Share [2002] BPIR 194 the bankrupt (now Mrs Fisher) was the sole owner of a property. The mortgage application form contained clear statements by Mrs Fisher that she was to pay the deposit personally and meet the instalments out of her own income. In 1996 she was adjudged bankrupt but gave no indication that she was not the legal and beneficial owner of the property. A trustee was appointed following which Mr and Mrs Fisher (who were unmarried but cohabiting at the time the flat was purchased) contended that Mrs Fisher had never been anything more than a nominee for Mr Fisher, who had in fact paid the deposit and maintained all the mortgage instalments. Witness statements and documentary evidence produced at trial supported this view. The court held Mr Fisher to be the sole beneficial owner of the flat but did so with specific mention that it was on the basis of evidence presented, but untested by cross-examination.

In the case of Springette v Defoe [1992] 2 FCRXXXXXof Appeal held that, in the absence of evidence to the contrary (in particular a communicated intention to hold the property in equal shares), the property was held on a resulting trust for the persons who provided the purchase money in the proportions in which they provided it.

Where there is an express declaration of trust that declaration is conclusive evidence of the shares in which the joint owners hold the property, unless that declaration is set aside. These cases all contain a common thread however. That is that any declaration of shares on the transfer deed will be very difficult to set aside. I would refer you to my above guidance on the sort of evidence you will need or more to the point your wife will need to be able to successfully do so however of course the starting point is reference to the transfer deed and any supplemental agreement which may set out a declaration of your respective shares.

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Customer reply replied 6 years ago

What do you think our chances are if we attempt to take the trustee to court, bearing in mind that we can prove that my wife was the sole contributor to all the expense of the property (mortgage, council tax, utilities etc. she even bought new windows some years back).

There are no agreements in place stating that she should benefit incrementally in any sale, but then I did not anticipate becoming bankrupt as I had assets through my business that I thought were failsafe. It turned out otherwise.

We are not looking to sell and have no money to pay off the trustee (even though we do not know how much he wants), as my wife has struggled just to keep up the payments.

I have virtually no income and am told that I am entitled to nothing from the state, so where do we go from here.

We would struggle to rent anywhere and our mortgage for £233,000 is only currently £475.00 per month.

Solicitor: Joshua, Lawyer replied 6 years ago
I would be delighted to continue to assist. Please kindly consider clicking ACCEPT. I wil continue to assist without further charge.

Kind regards
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Customer reply replied 6 years ago

Hi Joshua,

 

I am not happy with your answer as you have given me no indication of where my wife and I stand in opposing the sale of our house on the grounds that I am not entitled to a share of the equity as I have not contributed for almost twenty years. My wife the non-bankrupt has struggled for this time to pay everything and hold on to the house and we can prove this.

I would like to take the trustee to court and force the lifting of the charge. The house is in the process of being rebuilt due to subsidence (the insurance company is paying and again my wife paid all the premiums) but is currently worthless or rather worth much less than the mortgage.

 

Regards

 

Jim

 

 

Solicitor: Joshua, Lawyer replied 6 years ago
thank you. Unfortunately I cannot justify spending further time on this without payment. If you're prepared to click ACCEPT I would be delighted to continue to assist without further charge but in the alternative I regret I must opt out.

I'm grateful in anticipation of your understanding in this respect.

Kind regards
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Customer reply replied 6 years ago
The payment has been taken out of my account, so I cannot understand the problem. I hope that no more payments will be taken out!
Solicitor: Joshua, Lawyer replied 6 years ago
I do not work for JA. JA may have your money but I receive nothing unless ACCEPT is clicked. It is not unwillingness to help - it is simply a case that I must balance my time. I would be delighted to continue to assist as above.

Best wishes.
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Customer reply replied 6 years ago

You havn't been any help up to now, I am sorry to say, as I am no wiser or further on with my dilemma.

Thanks anyway.

Solicitor: Joshua, Lawyer replied 6 years ago
Sorry you do not feel this has been beneficial
Joshua
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