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Bankruptcy Case Studies In Respect Of The Matrimonial
Home
Background
Harold and Maria live together. Their
home is held in joint names. Maria has experienced financial
difficulties in her sole trader fashions shop. She owes trading
creditors £150,000. The home is worth £60,000
and the mortgage is also £60,000.
Question
If Maria applies for her own bankruptcy
(or an IVA) how much will have to be raised to safeguard the
home?
Solution
The sum needed is again determined by
calculating Maria's half interest in the equity in the property.
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|
£
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| Value of Property |
60,000
|
| Less: Mortgage |
60,000
|
| Equity of Harold and
Maria |
Nil
|
| |
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| Value of Maria's half
share |
Nil
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Comment
No capital sums has to be raised to enable
the property to be transferred into Harold's sole name.
The only essential cost to be incurred
is the legal fee to undertake the transfer and a nominal consideration
for the equity of £1.
Following Maria's bankruptcy (or IVA)
the home is then no longer subject to attack from Maria's
creditors.
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