Bankrupt? - Save your house & home before a bankruptcy order is made

Do I have to lose my house on being made bankrupt? Pre bankruptcy protection steps & case studies

How somebody who is about to be made bankrupt may not have to lose their house

Save your house before a bankruptcy order is made

This web page tells you how to save your house from the bankruptcy process before the bankruptcy order is made. Before you leave this page you should also read the Insolvency Service change of policy as regards the matrimonial home announced on 1 January 2011 which is at the bottom of this web page.

While your house may not look like the one pictured on the right keeping your home is likely to be your number one priority if somebody is threatening you with a statutory demand, bankruptcy petition or bankruptcy order.

Being tough with your creditors however is not the answer - Toughness however is important as you must be tough with yourself - Tough enough to take immediate ACTION.

Print this page and the case studies and show them to your wife (or husband). Discuss the content and you may find that you are injected with  enthusiasm to get the job done of protecting your house from circling creditors.

We expect that your first reaction to web pages like this which say that "your home can be saved" is -

"Are these people legitimate? - I know and common sense tells me that I can't save my house from bankruptcy".

Let's get that issue out of the way - Purnells are Licensed Insolvency Practitioners and Chartered Accountants and we are regulated to professional standards laid down by The Institute of Chartered Accountants In England & Wales. We have five Licensed Insolvency Practitioners all specialising in "house saving".

We are careful to protect our reputation by making sure what every word we say about saving your house from bankruptcy in the following case studies is correct - All you need to do is to understand a bit more about what you can legitimately do to save your house and home - all within the wording and spirit of the law as set out in The Insolvency Act 1986 - and then take ACTION.

LETS NOT GET TECHNICAL 

So let's not get technical - Instead click on the case studies below for plain english explanations as to what is possible to save your house from bankruptcy.  These are real cases  (but with altered names) about what you can also do to protect your house and home ahead of bankruptcy proceedings and from any creditors actions against your property pre bankruptcy.

• Number 1 - Example where there is £10,000 of equity and £350,000 of unsecured creditors. It costs £10,000 to get rid of those £350,000 of unsecured creditors.

• Number 2 - Example where there is no equity and £150,000 of unsecured creditors. In this case it costs £1 to get rid of those £150,000 of creditors.

• Number 3 - Example where there is negative equity and £1,000,000 of unsecured creditors. Only a cost of £1 to get rid of £1,000,000 of unsecured creditors.

• Number 4 - Example where the equity is £65,000 and the unsecured creditors total £160,000. In this case it costs £65,000 to get rid of unsecured creditors totalling £160,000

• Number 5 - Example where the "equity of exoneration" principle applies.

LET'S GET TECHNICAL

If you are interested in the technical side of saving and protecting your house from charging orders and bankruptcy then you might wish to click on the following links and print the advice notes - Become an expert! Discuss the pages with your solicitor or accountant and he will emphasise the need for you to take early ACTION.

• Determining your share of the equity

• Is your share of the equity reduced (or increased) arising out of the legal principle known as "Equity of exoneration"

• Transferring to your spouse (or another person) your interest in the property prior to (or after) bankruptcy.

Changes to the way in which the family home is dealt with

On the 1 January 2011 The Insolvency Service made an important policy announcement about how Official Receivers will treat the family home from then on. The announcement reads,

"From 1^st January the following changes came into effect:

The OR, as trustee of the bankruptcy estate, will no longer dispose of a bankrupt’s interest in a family home until two years and three months after the bankruptcy order is made, except if an offer is received which is in the creditors’ interests to accept.

At two years and three months a review will begin. In cases where the bankrupt’s interest in the property is valued at less than £1,000, steps will be taken to re-vest the property interest in the bankrupt.

Otherwise, if there is insufficient equity to attract an insolvency practitioner to act as the trustee of a bankruptcy estate, then enquiries will be made as to whether the bankrupt or a third party would be interested in purchasing the interest, assuming the property interest may be worth more than £1,000. If it is not possible to transfer the interest, and the interest is valued in excess of £1,000, the OR will consider applying for a charging order.

If there is sufficient equity in the property, and if the OR is not aware of any willing purchaser, a Secretary of State appointment of an IP trustee may also be sought.   

The OR has the discretion to effect an early re-vesting of the property back to the bankrupt in specific circumstances."

The effect of this policy change is that if your home inflates in value over that 2 1/4 year period you will have pay over the inflated equity value to the Official Receiver should you have not transferred the equity pre bankruptcy. Another reason for contacting Purnells now.

You can take steps to protect your house and home from bankruptcy. Why lose your house if you are made bankrupt when you can review the position FREE of charge before bankruptcy to see what is needed to keep your house and home.