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OzScot
| 26-08-2009 11:29 AM |
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Joined: 26 Aug 2009 Posts: 3 | My father was discharged as a bankrupt last year. However, the trustee is pursuing a debt incurred by my father via sequestration. The money owed stems from the fact that that he signed as a personal guarantor for a business loan. The business failed with debts. My mother had no involvement in the running of the business whatsoever, did not receive a salary nor any other benefits from the failed business. The trustee is in the process of trying to force my mother to agree to sell the family home to make good on my fathers debt. Both of my parents reside in Aberdeen, Scotland and I am not really in a position to assist either of them as I reside in Australia. My mother is 67 and my fahter is 76 so Iam very concerned about then being turfed onto the street. Can my mother be made liable by default for my father stupidity? My mother has offered some money towards the debt but this has been rejected. What advice can you give me to pass on if any? |
| DW George | 26-08-2009 12:29 PM |
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Joined: 01 May 2007 Posts: 492 My Profile | Hi Ozscot I guess what has happened is that your parents house has some equity in it. If the house is in both names then your father will be entitled to half of the equity. This being the case, then the creditors will be entitled to his half of the equity. If your father can't release the equity steps will be taken by the OR to realise it, which may mean selling the house. George |
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OzScot
| 26-08-2009 10:35 PM |
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Joined: 26 Aug 2009 Posts: 3 | Yup, pretty much how I understand it. However, I recall that there was a ruling set down in the house of lords circa 1990 which ruled that a spouse cannot be made liable for the others debts. Forcing my mother to agree to the sale of the house surely constitutes making her liable by default. My question is does anyone know of any legal precedent where the court has ruled in the favour of the sequestrated individuals spouse (e.g. my mother) and if so where would my mother find this ruling? |
| DW George | 26-08-2009 11:15 PM |
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Joined: 01 May 2007 Posts: 492 My Profile | You mother is not liable for your fathers debts. Your father has equity in the house which should which I assume according to the OR needs to be realised. Should the sale go ahead then you mother will keep half of the equity which cannot be touched by him. Is your mother in the position to buy your dad's interest in the house? If she can then there is no need to sell the house. I understand that you feel helpless being so far away so I'll ask about to see if there is anything else can be done to stop the forced sale of the house. |
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OzScot
| 27-08-2009 09:16 AM |
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Joined: 26 Aug 2009 Posts: 3 | I understand that you feel helpless being so far away so I'll ask about to see if there is anything else can be done to stop the forced sale of the house. Unfortunately I don't think she is in a position to buy out my father. My argument is that by being forced to agree to a sale she is effectively being made liable by default for the debt - it is unlikely that with proceeds left after a sale that they would actually be able to purchase another house without either a social or financial penalty. What on earth is bankruptcy for if you can be pursued to the ends of the earth regardless? Your assistance and advice is greatly appreciated thanks |
| DW George | 27-08-2009 11:09 AM |
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Joined: 01 May 2007 Posts: 492 My Profile | Right I have just had a long conversion with someone in the know about sequestration. First point is that there is nothing your mother can do to avoid the sale of her house should the Trustee pursue the matter. Your father owes money to the creditors and that money is tied up in the house so unless this can be released it will have to be sold. Don't despair there may be other options open. To force a sale the Trustee will have to instigate legal action which will cost in the area of £4k ish. There are also associated legal costs surrounding the sale of the house, around £1.5k. Also the value of the property is very subjective and may well be below what it has been assessed at. The value will not take into account today's market conditions and the fact that once people get whiff that a property is on sale as a result of bankruptcy they look for larger discounts. These costs can be used for negotiation purposes to reduced the final amount owed by £5.5k. How much is the Trustee looking for? The amount the Trustee is looking for can be reduced as I have detailed above. Once you've got the figure down to the bear bones then your farther or mother should look at obtaining a secure loan for that amount. If both are struggling to obtain a loan then either you or another member of your family could go guarantor for the loan. If nothing is done then the Trustee will go to court to force the sale of the house. George ps Can you email me who Trustee is. My contact may be able to help. george.c at debtwatchdog com |
