Bankruptcy and your home

So what happens to your home in Bankruptcy? The Official Receiver is not physically interested in your home but rather the liability and the potential equity available.

One of the first things the Official Receiver will want to know relates to your home and if you have equity. At the point of being made Bankrupt all of your assets belong to your estate which is managed by the Official Receiver for the benefit of your creditors.

Simply if the house has equity that can be released by sale then they are likely to pursue this. You will have the opportunity to have a friend or relative purchase this equity ( Beneficial Interest) from the Official Receiver.

If the house has no equity or is in negative equity then you will be given the option of purchasing the equity ( even though it is zero or negative ) for a nominal fee of £1 plus legal costs.

Before deciding to purchasing the Beneficial Interest back you really need to review finances and be sure that the mortgage is fully affordabe in the future. Once the Beneficial Interest is bought back then any future shortfall will need to be dealt with and will not be part of the bankruptcy debts.

Renting

If you are renting a home then it is usual for the Official Receiver to write to the Landlord to confirm that you have no arrears and to confirm the type of tennancy. It is always helpful to supply the Official Receiver with a copy of your current tennancy agreement to confirm the facts and figures.

In the event that you are leaving a mortgaged home and moving to rented accomodation it will always be easier to move BEFORE you petition rather than afterwards. It is quite common for landlords to require 3 - 6 months rent up front if your credit history is damaged so you will need to carefully plan the move.