A Property Business, a Difficult Marriage, and a Builder Who Wanted to Make Her Bankrupt
I ran a property development business with my husband. When the market turned, our already rocky marriage broke down. I left with my children and very little else — but things were difficult, and then they got frighteningly worse.
My husband and I had a property development business. We would buy properties, extend and refurbish them to a high standard and then sell. We used money from the business and personal borrowing — credit cards and loans — to finance the work, and whilst it was going well, it was good.
Our relationship was not good. I found him controlling, and working together made things ten times worse. I stayed because of our two young children and our joint business. Looking back, perhaps I stayed because I was too frightened to leave.
When the property market crashed, everything fell apart. We were in a lot of debt, and our builder had not done his job — he left us with a property with water leaking into the garage, then refused to correct the work and claimed we owed him for it.
There was a lot of stress, shouting, banging of doors, and crying. Finally, I took my children and left. I felt relieved. That was until the letters and the phone calls started. My now ex-husband had stopped paying all the credit cards, and now they were metaphorically shouting and banging the door.
I had no money apart from the income from my rental property in Manchester, which did not even cover my rent and living costs. The builder demanded payment, took legal action and threatened to make me bankrupt. I was terrified I would lose my rental property — my source of income and my children’s inheritance.
The Outcome in brief
Adviser: Priti Shah
Ms. R had been surviving rather than living — managing calls, managing fear, managing a household on her own after a marriage that had left her exhausted. The creditor arrangement brought the first real quiet she had felt in years. When bankruptcy loomed she wanted to know whether her children’s inheritance could be saved. It could. She emerged from the process debt-free, with the Manchester property still hers, and with a financial life she could finally build on.
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The work behind the outcome
Ms. R kept her BTL property in Manchester. This was not a straightforward result — it is not normally possible to keep a buy-to-let property in bankruptcy, where the trustee’s interest extends to all assets with realisable equity. Achieving it required detailed advance planning, a precise understanding of how trustees and charge-holders interact, and action taken at exactly the right moment.
When Ms. R first contacted Lightside, the immediate picture was chaotic. She had left her husband, she wasn’t paying her credit cards on time — just paying whoever shouted the loudest — often leaving herself short by mid-month. She had income from her rental property in Manchester, but it was not enough to cover her outgoings.
We advised that she needed a creditor arrangement to deal with her credit cards. She was very reluctant. She was terrified of not paying her debts — despite not having the means to do so — and was anxious to protect her credit file, having been a property investor and relying upon it for years. She held off.
The turning point came when she went to the dentist and could not pay for her treatment. Her dentist kindly agreed to a payment plan. Ms. R called Lightside and said she was ready.
The first step was decisive: stop using and paying all the credit cards immediately. Ms. R understood that she had to live within her income, not use payments to service debt she could not afford. Within days, this brought a sense of calm and control she had not felt for a long time. We contacted all her creditors, negotiated interest freezes, and arranged repayments she could genuinely afford. She managed all repayments herself through the Creditor Arrangement, which gave her the control she needed.
Then the builder’s claim escalated. He had worked on one of the development projects, made a claim for non-payment, and threatened to petition for Ms. R’s bankruptcy. Ms. R contested the quality of his work, but she did not have the means or the energy for a legal battle. We looked at her overall financial position carefully.
The advice was to let the builder bear the cost of making her bankrupt — which was what he was threatening — because bankruptcy would actually write off all her credit card debt and the builder’s claim. She agreed. But her condition was clear: “You have to save my children’s inheritance.” That was the Manchester BTL property, which her parents also held a second charge on.
Here is why that mattered technically. It is possible to retain a family home in bankruptcy in some circumstances, but it is not normally possible to keep a buy-to-let property. The Official Receiver, acting as Trustee in Bankruptcy, has an interest in all assets with realisable value — and a BTL property with equity falls squarely within that. A BTL in negative equity is treated differently, but that was not Ms. R’s position.
The solution lay in understanding what the Official Receiver does with BTL properties, and how charge-holders can legitimately take control ahead of the Trustee. Ms. R’s parents held a second charge on the Manchester property. On Lightside’s advice, they appointed their own LPA Receiver under that second charge — and crucially, they did so before the first charge holder had the opportunity to act.
The LPA Receiver took control of the rental income. Rather than that income flowing to the Official Receiver’s estate, it was collected by the LPA Receiver and used to service the first-charge mortgage. This meant the first-charge lender had no arrears and no grounds for repossession proceedings. The property was managed, the mortgage was paid, and the Official Receiver had no practical route to realise the asset.
Once Ms. R was discharged from bankruptcy, the LPA Receiver was stood down. The property still belonged to Ms. R. She could now benefit from the rental income, her debt was cleared, and her children’s inheritance was still intact.
A clean solution — but one that required precise sequencing, a detailed understanding of insolvency law, and action taken at exactly the right moment.
Ms. R kept her BTL property in Manchester throughout bankruptcy and retained it at discharge. Her debt was gone, the restrictions were lifted, and her children’s inheritance was safe.