Hi All,
Can anyone tell me: when you declare yourself bankrupt because of unmanageable debts, is there anyway to keep the house and its small mortgage and just offload the other debts, loans etc which are too big to pay??
eg could you change the name on the deeds? or is there any other way to save one's home?
Thanks for any help
Skyblue22
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BANKRUPTCY + MORTGAGE Advice needed please
#2
superbabe612 
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Posted 06 June 2005 - 09:04 PM
Hi skyblue22
First of all, well done for asking for help, it does make a difference!
When you go bankrupt the Insolvency Service appoints a trustee to handle your financial affairs, normally all your debts and assets have to be taken into account. In my own personal situation, I successfully applied to keep my car (worth about £2,300) as it was essential for me to get to work. I'm not sure if you would eb allowed to keep a large asset such a house, but I'd strongly advise you to get proper advice. I got a free hour with an insolvency advisor, which basically reaffirmed what I already knew, but they can advise you on your position re your house and mortgage.
Would it be worth looking into the possibility of re-mortgaging your house to consolidate your debts? This may not be a wise suggestion because it just adds to your debt, but if you get to keep your house, it may worth looking into.
If you share the house/mortgage with another person, there may be a chance they could transfer it all into their name. This is another point you need proper advice on.
Good luck, let us know how you get on!
First of all, well done for asking for help, it does make a difference!
When you go bankrupt the Insolvency Service appoints a trustee to handle your financial affairs, normally all your debts and assets have to be taken into account. In my own personal situation, I successfully applied to keep my car (worth about £2,300) as it was essential for me to get to work. I'm not sure if you would eb allowed to keep a large asset such a house, but I'd strongly advise you to get proper advice. I got a free hour with an insolvency advisor, which basically reaffirmed what I already knew, but they can advise you on your position re your house and mortgage.
Would it be worth looking into the possibility of re-mortgaging your house to consolidate your debts? This may not be a wise suggestion because it just adds to your debt, but if you get to keep your house, it may worth looking into.
If you share the house/mortgage with another person, there may be a chance they could transfer it all into their name. This is another point you need proper advice on.
Good luck, let us know how you get on!
#3
Deb
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Posted 13 June 2005 - 03:02 AM
I can understand why someone who has no assets such as a house would consider bankruptcy, if they didn't have much income and were faced with an alternative of paying off the debt in five or ten years. My advice, though, to anyone who has assets, particularly if they have a substantial interest in a house, would be to not go bankrupt and see first if you can deal with the debt by selling all or part of those assets. There seems to be a mis-perception that once the year is up, a person who has gone bankrupt is then discharged and somehow whatever assets they owned that haven't sold will become theirs again. This is not the case, and certainly not with a house or part of a house they may own. The trustee, provided he has registered his interest by taking a charging order over the house, can deal with the house at any time during the future.
With a house, the trustee may not be able to sell the house straight away, if the bankrupt person has a partner and children, - they usually allow a year or so to sort out alternative housing arrangements. But the bankrupt's interest in the house becomes the property of the trustee, so any increase in the value of the house from the date of bankruptcy accrues to the trustee rather than the person going bankrupt.
The partner/spouse/co owner can make an offer to the trustee to buy the interest of the bankrupt person. This isn't a bad idea, because then the increase in value will not go to the trustee, and the bankrupt, assuming all other things like relationships remain equal, gets to enjoy living in the house, even if they no longer own any part of it.
If the trustee doesn't sell the house what they will then probably do is take a charging order over it, which basically registers their interest in the property, so that, once it is eventually sold, they will recover the bankrupt's share of the property and any profit made on the sale.
If they don't take out a charging order, and if the property doesn't sell within three years of the person going bankrupt, the ownership of the property may then be returned to person, who would by then be discharged from bankruptcy.
With a house, the trustee may not be able to sell the house straight away, if the bankrupt person has a partner and children, - they usually allow a year or so to sort out alternative housing arrangements. But the bankrupt's interest in the house becomes the property of the trustee, so any increase in the value of the house from the date of bankruptcy accrues to the trustee rather than the person going bankrupt.
The partner/spouse/co owner can make an offer to the trustee to buy the interest of the bankrupt person. This isn't a bad idea, because then the increase in value will not go to the trustee, and the bankrupt, assuming all other things like relationships remain equal, gets to enjoy living in the house, even if they no longer own any part of it.
If the trustee doesn't sell the house what they will then probably do is take a charging order over it, which basically registers their interest in the property, so that, once it is eventually sold, they will recover the bankrupt's share of the property and any profit made on the sale.
If they don't take out a charging order, and if the property doesn't sell within three years of the person going bankrupt, the ownership of the property may then be returned to person, who would by then be discharged from bankruptcy.
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