If you are considering Bankruptcy one of your concerns may be whether you can protect your belongings. So can you give assets away before going bankrupt to keep them safe?
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- Can you give away your car before going bankrupt?
- Could you sign over property to someone else?
- Can you protect your belongings by hiding them?
Considering Bankruptcy? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts.
Can you give away your car before going bankrupt?
If your car it is worth more than £1000 it may be at risk if you go bankrupt. Generally speaking unless you are self employed and it is a tool of your trade, you will have to buy a cheaper one and hand over any extra money realised.
You might think a way around this would be to register your car to someone else. However this would be known as a transaction at undervalue and the vehicle would have to be returned. The Official Receiver (OR) would find out about the transfer by carrying out a DVLA check.
It is acceptable to sell your car before going bankrupt. However you must be able to show that you received a fair market price. In other words you can’t sell a BMW worth £5000 to your friend for £1000. Such a transaction would be discovered by the OR and again the car would have to be returned.
If you sell your car at market price, you could use the money raised to buy a cheaper one for £1000 or less before you go bankrupt. The remaining funds can also be used to pay your bankruptcy application fee.
Is it possible to sign over property to someone else?
If you are a home owner your property could be at risk if you go bankrupt. This is particularly the case if there is a lot of equity in it. So could you sign it over to someone else such as your spouse or another family member to avoid this?
The answer to this is no. You will have to declare if you have sold or given away any properties in the last 5 years on your application form. Even if you say no, the OR will find out because they will perform a land registry search. This will show that you have owned property or land in the 5 years.
You are allowed to sell your share of your property to someone else before you go bankrupt. However you must be able to prove you get a fair market value. In addition the OR will want a detailed account of what happened to the money you received. Any funds not used for reasonable living expenses will have to be handed over.
If you give away property more than 5 years before going bankrupt this transaction is likely to be OK. The Official Receiver has no right to reverse it unless you already knew at the time you would eventually have to go bankrupt.
Can you protect your belongings by hiding them?
Firstly, it is important to realise that you will normally be able to keep all of your household belongings if you go bankrupt. The official receiver is not interested in things like your furniture, washing machine, iphone and TV.
As such there is no need to worry about having to hide these things. In fact the rules state that you only have to declare household belongings if individually they are worth more than than £500 on the second hand market.
If you have belongings that you feel are of greater value, you should declare these. That said if you do not mention them the Official Receiver is unlikely to search your home address. However such assets would come to light if you subsequently have to make a insurance claim.
Worried about what will happen to your belongings and assets if you go bankrupt? Call us (0800 077 6180) or complete the form below to get further advice.
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