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Bankruptcy and your home

View profile for Justin Emerson
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Bankruptcy is only one of the options available to you if you are in financial difficulties.  Whether bankruptcy is right for you will depend upon a number of factors.  One factor you should consider carefully before proceeding with bankruptcy is the potential impact it could have upon your home. 

Homeowner

If you own your own home upon being declared bankrupt your interest in the property will automatically vest in the Trustee in Bankruptcy.  The Trustee in Bankruptcy will then decide whether to sell the property in order to pay the bankruptcy debts.

If your home is in negative equity or there is a little equity in the property then it is unlikely that the Trustee in Bankruptcy will look to sell the property.  This will be reviewed throughout the bankruptcy period. 

If you have equity in the property then it is likely that the Trustee in Bankruptcy will sell the property.  If you have family or defendants living with you may be able to postpone the sale for up to a year to give you time to make alternative accommodation arrangements.

You may be able to arrange for your partner or spouse to purchase your interest the property. 

A Trustee in Bankruptcy has three years to commence Court proceedings to sell your property.  After three years the property will revert to you.

Rented Accommodation

If you live in rented accommodation going bankrupt should not impact upon your home.  You will however need to continue to maintain your rental payments otherwise your landlord may seek a possession order.

If you do lose your home

If you become homeless because of your bankruptcy you may be eligible for help with your re-housing.  However, if you have sold your home to avoid going bankrupt you may be deemed to have made yourself intentionally homeless.  In those circumstances you may not be eligible for rehousing.

Should you find yourself in financial difficulties and considering bankruptcy you should seek advice.  A solicitor or insolvency practitioner will be able to guide you through the options available to you so you can make an informed decision about what is best for you and your circumstances.

If you require any further guidance on this matter, please feel free to contact Justin Emerson on 01245 228113 or emersonj@gepp.co.uk

This is not legal advice; it is intended to provide information of general interest about current legal issues.

 

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