Transactions at an Undervalue

If, prior to bankruptcy proceedings, a debtor attempts to transfer an asset (such as a property, vehicle or expensive item) into the name of a family member or friend, in the hope that it will be excluded from the bankruptcy estate, the Official Receiver or Trustee can examine the debtors previous finances (up to 10 years prior to the bankruptcy) to establish if the asset was transferred for less than the market value. For example, if the debtor had sold a property to a friend for £1.00 and then attempted to go bankrupt 8 years later, with the hope of regaining the property once the bankruptcy had been discharged, the OR can apply to have the property sold and any equity realised for the benefit of the creditors. This is known as a "Transaction at an Undervalue".