Jail Term a Warning to Those Who Seek to Avoid Paying Debts

A Bankrupt has been sentenced to six months in prison recently for facilitating a fraudulent transfer of jointly owned property in the period of five years prior to the date of his bankruptcy.

The Bankrupt’s conviction followed an initial investigation by the Insolvency Service and a full criminal investigation and prosecution by the Department for Business, Innovation and Skills. The investigation found that just over one month prior to him being made bankrupt on 16 February 2011, the Bankrupt and his wife sold their jointly owned property to their children with what is called a “gifted deposit”. This ensured the children did not pay anywhere near the true value of the property as the gifted deposit made the larger share of the value a “gift” to them. The transfer of property was carried out at a time when the Bankrupt was fully aware that a number of creditors were taking legal action against him and that a bankruptcy petition had been issued against him. He was also aware that his joint share in the property was his only asset.

This conviction should serve as a warning to those who seek to avoid paying their debts by deliberately attempting to put their assets out of reach of their creditors. In this case, the Bankrupt sold his house to his children making part of the transfer a gift. This is against the law relating to insolvency. It is therefore very important to obtain proper legal advice concerning your debts before proceeding in this way.