HomeCase studiesPrivate clientsPersonal insolvencyHMRC Bankruptcy Petition was preventing completion of a remortgage

Why the Client needed our help

Recently we have seen a spike in the number of bankruptcy petitions presented by HMRC.

Naturally this has caused a lot of issues for individuals who are in the process of, or considering, obtaining a remortgage or further lending secured against their property to raise money to pay their tax bill.

  • Whilst it might seem simple obtaining funding from a mortgage lender, the presentation of a bankruptcy petition necessitates the registration of a ‘Pending Action’ against the debtor’s property.
  • The Pending Action is registered against the legal title in the form of a restriction in order to protect the interests of the creditors and stop the debtor from selling or disposing of the property while there is an extant bankruptcy petition. 
  • This creates a circular issue where the incoming lender is unwilling to lend while there is a Pending Action against the title and will not release the funds, and HMRC will not dismiss the petition until they have received the funds. You may then be stuck between a rock and a hard place with neither party willing to budge.

Our team has formulated a process which enables the new borrowing to be completed, the debt paid, and the bankruptcy petition disposed of.

This does involve some careful co-ordination and communication between the parties, but it works.

FWJ recently acted for a client in precisely this position. The lender was persistent in that the petition must be dismissed before they would release the money, and HMRC would not agree to dismiss the petition until the money was received.

How we helped

Our client had secured an offer of remortgage but her conveyancing solicitor was unable to complete with the bankruptcy petition pending.

We were able to secure adjournments of the bankruptcy petition whilst we liaised with all parties to put the mechanism in place to pay the debt.

That process involved liaising with HMRC, the Court and the various conveyancing solicitors involved when ultimately the funds were released and the debt paid with the petition dismissed.

We then tidied up by ensuring that all registrations of the bankruptcy petition were removed from all property and credit files.

The Outcome

The client now has peace of mind where the risk of bankruptcy has been removed and all registrations of the petition cancelled.

Sue is efficient and responsive. She takes the time to explain her strategy in detail using plain English and keeps you regularly updated on both cost and progress. I highly recommend her

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James Roberts


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Bradley Hopkinson

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