money nightmare

[hanray]

a friend owes a large amount of money but has gone bankrupt. we put a charge on a property he owned but as we are the 4th chargee the second has repossessed the house. he owns another house which is in his wife's name. where do we stand?

[themas]

1. As you probably know, any equity from the house sale will go to the secured creditors in order of their charges, so you may well end up with nothing from that.

2. You say he owns another house which is in his wife's name. Obviously he doesn't own the legal title but you presume he owns the beneficial interest - i.e. he paid the deposit & the mortgage. If this is the case, when he went bankrupt he should have declared this on his statement of affairs, & the Official Receiver or Trustee should then look into it. If they decide he does own the beneficial interest they should realise this for the benefit of the creditors.

3. However, the costs of the OR/Trustee are paid first from any money received from the bankrupt & anything left over is distributed to the creditors pro rata to the amount of their debts. So, if there is not much equity in this house, you may find you get nothing from it anyway.

4. If you are unsure whether the OR/Trustee is aware of the house you could contact them to let them know, but you should have some pretty firm evidence and not just supposition.