Home in bankruptcy
If your house is at risk then please make sure that you seek advice. Dealing with your home in bankruptcy is extremely complex and cannot be written into a website. The following merely answers some questions.
Will I definitely lose my home?
No. It is a myth that you will always lose your home. However, you should be aware that your home will be dealt with, the outcome of which will depend on a number of factors. It is possible that the trustee applying to the court for sale and possession of your property will be the outcome. It may also be possible for you to buy back the property.
Is there a wrong way to deal with the home?
Yes, yes and yes! If the trustee in bankruptcy has reason to suspect that you have dealt with your home adversely before the bankruptcy then they may exercise their investigative powers to establish the nature of the transaction and your intentions at the time.
If the nature of the transaction and your intentions constitute a bankruptcy offence then you may be punished by imprisonment, a fine or both.
It is important to realise that some previous transactions may be reversed or altered.
Can you deal with the home before bankruptcy?
There is nothing wrong with re-establishing your legal position with regard to the home but make sure you seek legal help first. For example, this may happen where a non-bankrupt party has an interest to protect.
You must seek legal advice if you wish to deal with your property before bankruptcy. Seek advice from a solicitor.
What can happen to your home in bankruptcy?
The following may happen as your home is dealt with during bankruptcy:
- Your interest may re-vest back to you
- A friend or relative can purchase your share of the equity
- Your house may be sold on the open market, without the need to go to court, if your non-bankrupt co-owner agrees and the trustee agrees
- You may be able to come to an arrangement with the trustee to buy back your interest over a period of time
- The trustee may apply to the court for an order for sale and possession
- The trustee may apply to the court for a charging order
- The trustee may apply to the court for suspended possession order
You may be able to put off the sale for 12 months if you have children or a spouse living with you.
What is the 3 year rule?
The trustee has three years in which to deal with your interest in your matrimonial home, after which the interest will re-vest back to you. These three years will run from the date of the bankruptcy order or when the Official Receiver or trustee was notified of the property if notification takes place more than three months after the bankruptcy order. In exceptional circumstances this three year period can be extended.
Do I have any defence to dealings with my home?
There may be situations where you do not agree with the claim on your home from the trustee and may wish to defend a claim. For example, a joint property where the non-bankrupt owner is entitled to more than 50% and the trustee believes the entitlement is just 50%.
As mentioned at the top of this page, If you are considering bankruptcy then seek advice. Dealing with property in bankruptcy is a complex matter.
