currently negotiating the beneficial interest

[maha]

My husband went bankrupt last year and we are currently negotiating the beneficial interest with a view to buying it. When doing so we were told to deduct the costs involved in a sale e.g solicitors and estate agent fees. We did this but my husbands trustee said that they could not be taken into account. This is contrary to what we have been told. Is this the case and if it is not are then any organisations out there that negotiate on the behalf of the bankrupt?

Second question. My husband does domiciliary work and as such needs a car. I havae read that in circumstances such as these the car is regarded as a tool of the trade and should not be taken so long as it is reasonably priced. Is this so and what is considered a reasonable price? We have had the car valued at £5,000.

[pbeck]

The sale price to be agreed for releasing a bankrupt's interest in the equity of a property is simply a matter of negotiation. While it would be unreasonable for a Trustee to demand more than the interest in the property is worth, there is no specific right for a bankrupt's partner to acquire the interest at a discount.

When I did many bankruptcies in the late 1990s and early 2000s house prices were rising quickly, I refused to accept a discount on the bankrupt's share of the property, either they paid market value or I sat back and waited for prices to go up further. Not surprisingly, everyone paid up.

These days, house pries are flat, if not actually falling, also the law has changed so a Trustee MUST deal with this in 3 years otherwise he loses his interest in the property. A bankrupt's partner is in a much better position to negotiate a discount over the price, as a Trustee I would find a dicount of 5% to open market value acceptable to cover notional legal and agents' fees.

As for the car, probably a car worth £5,000 would be sold by the Official Receiver and replaced with a cheaper one worth say £1,000.

Philip Beck

Licensed Insolvency Practitioner and IVA specialist

[MelanieGiles]

The Official Receiver never allows costs of sale to be deducted from the beneficial interest calculation, but a private sector IP might be more reasonable. Is your husband dealing with the Official Receiver?

I agree with Philip re the car, but in my experience a more generous allowance is likely of up to £2,000 is likely. I still do a lot of bankruptcy work, and this information is current, however the OR in South Wales might be more generous than in other parts of the country.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp