Bankruptcy and property

ButieJ

Hi

I keep being told by people who have gone through bankruptcy that there are ways to ensure your home is not sold as part of the Bankruptcy ruling.

How can this be? I always thought that being bankrupt meant all your assets were to be sold off to pay the outstanding debts.

John

Broken_hearted

Don't know, but if you find out it might help others.

smokey112

Hi

I think it all boils down to how much equity you have in your home - the OR has a right to vest an interest in the property IIRC

In our case our mortgage + secured loan is greater than the house value therefore we are in negative equity however this could change over the next couple of years if the house value goes up and the money outstanding on the secured loan would go down. In order for the OR to lose his interest in the property we have to find a 3rd party to pay £500 for the OR's beneficial interest. this means the house is protected. We also have the same for my OH ex'x house - although he has not lived there for over 10yrs they had not sorted out the legal side of things (even if they had done so in the last 5yrs then this could still have been overturned by the OR) so the OR had an interest in her property which was £25k by the time things like mortgage payments etc had been taken in consideration his share was £2-3K but this was then taken down to £500 beneficial interest (only found this out today so this is a relief for us)

I know that you can find more info on
https://www.insolvency.gov.uk

there is a section - what can happen to my house

HTH
Ang
x

livilou

it really depends on circumstances, although as a general rule yes your house is an asset and you stand to lose it, it depends how much equity there is, whether the mortgage is joint and the debt in one persons name (in my case hubby has gone bankrupt but house is mine as well but I still have to buy his share)
I think if you decide to enter into bankruptcy then you have to do it on the basis that you are prepared to lose your home but yet hope and pray that it doesn't come to that.

the insolvency website should answer some queries.

x

Addicted2Chocolate

if the house is a family home, and does not aquire postive equity within 3 years of the bankruptcy order date, then it will re-vest in the bankrupt (ie ownership reverts back to the bankrupt) but in current climate i can think of very few cases where this will happen. like livilouu says, where jointly owned the joint owner can purchase the bankrupt's interest enabling them to keep the house, but the Trustee would have done their job of realising the bankrupts interest.