Question

Jon, I need to go bankrupt, but first I am going to transfer £10,000 to my brother to hold onto, and I am transferring the property I jointly on with my wife into her name alone. There is some equity in the property, but we still have a small mortgage left to pay. The debts are in just my name, and I can no longer afford to pay them. In total I owe around £20,000. Can I get into trouble for doing this, and how would they find out.

A

Answer

A,

It is not wise to transfer assets, money or property, prior to going bankrupt. The Official Receiver in your bankruptcy could view this as hiding assets, and they could reverse the transaction if possible, or go after your brother for the money, making him bankrupt if he refuses to cooperate.

Transferring property is the same, it can be viewed as hiding an asset.

If you owe £20,000 and have £10,000, you may be able to settle the accounts through a Full and Final IVA.

How much equity is in your property?

Depending on this amount, technically you may not be insolvent, and not be able to go bankrupt, or enter into a Debt Relief Order. You will need to find an alternative way to repay the debts, possible a Debt Management Plan, depending on your full set of circumstances.

As to how “they”, the Official Receiver may find out about the assets being transferred, they may not. But in reviewing your bankruptcy, if they do come across the transfers, it will not look good. And there are many ways the OR could find the transfers.

I hope this helps.

Regards,

Jon

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