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Bankruptcy Case Studies In Respect Of The Matrimonial
Home
Background
William and Ffion are married and they
own their home jointly. The property is valued at £250,000
and is subject to a first mortgage of £190,000 and a
second mortgage of £80,000. William has just lost a
libel case and is ordered to pay £1,000,000.
Question
If William is made bankrupt (or applies
for an IVA) what sum must Ffion raise to buy out his interest
in the matrimonial home?
Solution
As before the sum needed is determined
by calculating the amount of William's equity in the property.
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£
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£
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| Value of Property |
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250,000
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| Less: First Mortgage |
190,000
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| Less: Second Mortgage |
80,000
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|
| |
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270,000
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| Shortfall of Equity
toWilliam and Ffion |
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(20,000)
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| |
|
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| William's Share of the Equity |
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Nil
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Comment
Ffion does not have to raise any capital
to have the property transferred into her name as there is
negative equity.
Ffion must be careful however to pay
the small legal fee involved in connection with the transfer
to her name.
William and Ffion continue to live in
the same property and the winner of the libel case receives
nothing at all!
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