Information about your home when bankruptcy
This section covers the questions you
are most likely to want answered about your home if you are made bankrupt:
Will I lose
The Official Receiver or the trustee
(if an insolvency practitioner has been appointed in place of the
Official Receiver) may have to sell your home to go towards paying
your bankruptcy debts. This applies whether the home is freehold or
leasehold and whether it is solely or jointly owned.
Please note that if your home is mortgaged
and you do not keep up your payments, your lender may be able to sell
your home. You should consider contacting your lender about your bankruptcy
and your mortgage payments.
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When will the
Official Receiver or trustee sell my home?
If your husband, wife or children
are living with you, it may be possible for the sale to be put off
until the end of the first year of your bankruptcy. This gives them
time to make other housing arrangements. They should contact the Official
Receiver or trustee dealing with your bankruptcy.
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be done to stop the Official Receiver or trustee selling my home?
Your husband, wife, partner, a relative
or friend may be able to buy your beneficial interest in the home.
This will stop the Official Receiver or trustee selling your home
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What is meant
by my beneficial interest in my home?
This is your interest in the proceeds
of sale of the property as opposed to the legal title to the property
which is held by the owner. If you are the sole owner, the beneficial
interest is the whole value of the property. If there are joint owners,
the beneficial interest is usually an equal share of the value. (If
there are any amounts owed on mortgages or other loans secured on
the home, these will be repaid from any proceeds of the sale.)
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to my beneficial interest and legal title to my home when I am made
Your beneficial interest always transfers
to the Official Receiver or trustee. If your home is solely owned,
the legal title usually also transfers to the Official Receiver or
trustee. If the home is jointly owned, the legal title remains with
you and the co-owner but this does not prevent the Official Receiver
or trustee taking action in relation to the property.
The Official Receiver or trustee has
to realise (or sell) the beneficial interest to raise money to pay
your creditors. One way of doing this is to sell the beneficial interest
to your husband, wife, partner, a relative or a friend.
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What should be
done if someone wants to buy my beneficial interest?
If an insolvency practitioner is
handling your bankruptcy, your husband, wife, partner, relative
or friend should contact the insolvency practitioner for information
on what to do.
If the Official Receiver is handling
your bankruptcy, your husband, wife, partner, relative or friend
should contact the Official Receiver. If the home is jointly owned,
they may be able to take part in a low-cost conveyancing scheme run
by The Insolvency Service and a firm of solicitors. Under this scheme,
the beneficial interest and the legal title can be transferred to
your husband, wife, partner, relative or friend. Please note that
they will have to pay:
- for a solicitor or licensed conveyancer to act for them in the
- £211 (as at February 1999) to cover the Official Receivers
legal costs. This amount must be paid in advance. It includes
an allowance for expenses which may be incurred in the transaction.
If the allowance is not fully used, they will receive a refund;
- the cost of an independent valuation unless you already have
a very recent independent valuation of the property;
- the agreed purchase price for the beneficial interest based
on the valuation. If your home is now worth less than the amount
you still owe on it, the price of the beneficial interest will
be set at £1
The purchaser will also have to give
the Official Receiver up-to-date details in writing of the amounts
which would be needed to fully pay off the mortgage and any other
charges on the property.
If your husband, wife, partner, relative
or friend cannot afford the costs of the scheme at present, they may
still be able to take part at a later date. They should contact the
Official Receiver about this.
If at a later date an approach is
made to the Official Receiver to purchase the beneficial interest,
and the property has increased in value, it is likely that the purchase
price will be more than £1.
If the home is mortgaged, the lender
may have to agree to the sale - the solicitor or licensed conveyancer
dealing with the transaction will be able to advise on this.
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Can I buy the
beneficial interest if I am sole owner of the property?
It is possible for the Official Receiver
or other trustee to transfer the beneficial interest and legal title
to you, your husband, wife, partner, a relative or friend but the
transaction is more complicated. If you wish to proceed in this way,
please contact the Official Receiver or trustee for further details.
Please note that in this type of transaction,
costs like those listed overleaf must also be paid (but there is no
low-cost conveyancing scheme).
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if no-one buys the beneficial interest?
It remains with the Official Receiver
or trustee. It does not return to you on your discharge from bankruptcy.
The value of the beneficial interest may increase over time if the
market value of your home increases.
The benefit of any increase in
value will go the Official Receiver or trustee to pay your debts,
even if the home is sold some time after you have been discharged.
You and your family will have to move out if the home has to be sold
to pay your creditors.
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if I rent my home?
If you fail to keep to the terms of
your tenancy agreement, such as not paying your rent, the landlord
may take action against you. The Official Receiver or trustee will
normally have no interest in your home to sell for the benefit of
creditors. In most cases the Official Receiver or trustee will need
to tell your landlord that you are bankrupt. We suggest that you seek
legal advice on what may happen under your tenancy.
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