Bankruptcy & Property is Your Home Safe?

Property Dangers in Bankruptcy

In the past I have mentioned the dangers of what will happen to your property in Bankruptcy or an IVA. Here are some notes that need to be considered if you do not own a property but you are considering going bankrupt:

If you do go bankrupt the Official Receiver will try to establish if you have any beneficial interest in the property that you are or have been living in.

The Official Receiver will look into the following scenarios:

  1. Has the Bankrupt assisted in providing a deposit for the property?
  2. Has the Bankrupt assisted in paying a percentage of the mortgage?
  3. Has the Bankrupt assisted in paying for any improvements to the property that have increased the value of the property?
  4. How long has the Bankrupt lived at the property?
  5. Who pays the household bills at the property (eg if the Bankrupt was paying the bills at the property and the owner was only making the mortgage payments)? Then it may be considered there is a beneficial interest.
  6. How much equity there is in the property? If there is no equity in the property then it is unlikely there will be a beneficial interest. But remember the Official Receiver can have an interest in a property for 3 years.

These are some of the things that the Official receiver will take into account when deciding if there is any beneficial interest in the property. It is only the Official Receiver or Trustee in a Bankruptcy that can make this decision, when they have taken all the facts into account.

Bankruptcy Advice

If  you are thinking of going bankrupt, then make sure that you get as much advice and information as possible! If you get it wrong you can not change your mind.

You could loose your property when going bankrupt, or an IVA for that matter


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