Self-declared bankruptcy and unknown charge on property!!

CaggieBaggie

Hi there
Many years ago I had my own business which wasn't doing very well so I declared myself bankrupt. I was told by the Insolvency Service that my house was in negative equity so not to worry any more. Unbeknown to me, at some point the insolvency practitioner placed a charge on my jointly owned property and after 15 years (a decade after I had been discharged) demanded the money back (c. £50K including interest). I was really shocked as I didn't know that they could put a charge on the property without me knowing about it! I eventually had to get a remortgage to pay of this considerable sum. I have always wandered if this practice was normal or legal?

debt_doctor

Hi,
Prior to April 2004, the family home did not have the 3 year 'use it or lose it' rule for IP's to dispose of the family home - in other words once you became bankrupt (prior to 2004) there was no time limit to realise the asset, and it was in the past that an IP would suddenly pop up 20 years after bankruptcy and say "I'll have your house now thank you!" -this due to a rise in equity of the former negative equity property.


Quite rightly (and long overdue) the government said this was unfair that an IP could simply wait forever to dispose of a property so a limit was set of 3 years to 'deal with' the family home. We still have this limit today.


In 2004, a message was sent to IP's that you have until April 2007 to deal with all properties held prior to 2004 - I was an adviser then, and I remember the scramble of IP's to deal with property.
If at a point near to the April 2007 cut off limit, IP's who still felt that the property was not worth enough to realise the equity applied for a charging order to maintain an interest past 2007.


I think this is what will have happened to you. Today, charging orders are not normally applied for unless the bankrupts share of the equity at the point of application is between £1k to £10k. I don't know if those rules on equity figures applied in 2007.


As to your main point - You should have been notified by both the Trustee and the Land Registry (and the joint owner) about a charge being levied upon the property, and I have no idea why you were not.


DD