What happens to equity in the house?

Chris_P_2

Hi. If someone has say £50,000 equity in a property and a £16000 unsecured loan. What happens if they file for bankruptcy?

Regards

TheGardener

Well generally in that case the OR would normally claim the equity on behalf of the creditors - and their own fees which can significantly increase the value of the overall debt

National_Debtline

Hi Chris P,

If you only have a £16,000 personal loan, and are named on a property with £50,000 of equity, then bankruptcy is extremely unlikely to be a suitable option. In bankruptcy your assets are seized and sold to raise money for the creditors so you would very likely lose the property in this scenario.


The Official Receiver (OR) would realise your asset in the property either by selling it, or by a third party 'buying your interest' back from the OR. This is at the OR's discretion and would normally need to be, more or less, the value of your equity, and that is more than your debt. So, just from this perspective, bankruptcy would not be an advisable option for you with a £16k loan and with £50k equity.


Try and post your SOA in DFW and look at other options. Good luck,


Laura
@natdebtline

Chris_P_2

Thanks SOA and DFW?

John-K_3

A statement of affairs, and the debt free wannabe forum.