Re: Caution

I was declared bankrupt

Did you petition for the bankruptcy, or was it one of your creditors?

in 1995 and at the time I had no equity in my
1995... That makes it an "old style" bankruptcy, where the Official Receiver could come back for the house at *any time* in the future. That's not the case for new bankruptcies these days.
property that i jointly own with my wife so my house was not >sold.Since then(1997)a charge has been placed on the property to repay >the debts(50k).

Tut. Placing a charge does not repay the debts. The charge has no effect until the property is sold. At that time, you must pay the debts out of the equity that you realise as a consequence of the sale.

I have now received a letter from the OR and he wants >to realise his interest in the property which means that i have to pay >the debts by the end of April or he will force me to sell the house to >pay the debt. I wrote to the OR in 2001 to find out how i could remove >the charge on my property and I received a reply stating that if there >was no equity in the property my wife could have brought his interest >for £1

This is entirely correct. From the Insolvency Service web site:

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---BEGIN Jointly owned properties only: What should be done if someone wants to buy the beneficial interest?

If an insolvency practitioner is handling your bankruptcy, then your husband, wife, partner, relative or friend should contact the insolvency practitioner for information on what to do about buying the beneficial interest.

If the Official Receiver is handling your bankruptcy, your husband, wife, partner, relative or friend should contact the Official Receiver. They may be able to take part in a property conveyancing scheme run by The Insolvency Service and a firm of solicitors.

Under this scheme, the beneficial interest can be transferred back to you, or the beneficial interest and legal title can be transferred to your husband, wife, partner, relative or friend.

Please note they will have to pay:

  • for a solicitor or licensed conveyancer to act for them in the transaction; * £211 (as at April 2004) to cover the Official Receiver's legal costs. This amount must be paid in advance. It includes an allowance for expenses that may be incurred in the transaction. If the allowance is not fully used, they will receive a refund; * the cost of an independent valuation unless you already have a very recent independent valuation of the property; * the agreed purchase price for the beneficial interest based on the valuation. If your home is now worth less than the amount you still owe on it, the price of the beneficial interest will be set at £1.

They will also have to give the Official Receiver up-to-date details in writing of the amounts that would be needed to fully pay off the mortgage and any other charges on the property.

If your husband, wife, partner, relative or friend cannot afford the costs of the scheme at present, they may still be able to take part later. They should contact the Official Receiver about this.

If, later, they approach the Official Receiver to buy the beneficial interest, and the property has increased in value, the purchase price is likely to be more than £1.

If the home is mortgaged, the lender may have to agree to the sale - the solicitor or licensed conveyancer dealing with the transaction will be able to advise on this.

---END

well by this time there was equity in my property. My question >is if I had been informed of this option by the OR at the time of my >bankruptcy I would have taken it up, did he have a legal duty to >inform me of this option and if so is there anything I can do now so >that I am not forced to sell my house to pay the debt.

You may have problems trying to do anything about this. From _Corporate & Personal Insolvency Law_, 2nd Ed., by Fiona Tolmie (Cavendish Publishing, 1-85941-772-8), Chapter 20, Part 3:

"In Mond v Hyde, the Court of Appeal held that the getting in of a bankrupt's estate is part of the bankruptcy proceedings, and therefore the Official Receiver in bankruptcy, as an officer of the court, is immune from suit in respect of statements made by him or her as such, even if made negligently."

As I interpret it, this prevents you from doing anything if the Official Receiver makes a mistaken statement in the course of his duties as Official Receiver "in bankruptcy" - meaning while working on a bankruptcy case.

From the Insolvency Service web site:

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ch04.htm

"The Insolvency Service and its Official Receivers cannot provide legal or financial advice. You should seek this from an authorised insolvency practitioner, a citizens advice bureau, a solicitor, a qualified accountant, or a reputable financial adviser or advice centre."

This means that you should have sought advice from someone else - a local solicitor's free consultation, the CAB, a local debt counselling service, someone. The Insolvency Service does not provide this service.

Go now to see someone about this as soon as possible (or sooner), and you may be able to stop the OR from selling the property. You have had plenty of time between 1995 and today to seek this kind of advice. Go NOW and get it, before your house becomes someone else's...

(uk.legal and uk.finance added in case anyone else there can offer advice.)

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SteveR
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