Case Study 4

Bankruptcy Case Studies In Respect Of The Matrimonial Home

Background

John and Norma are married. Their home, which is held jointly, is valued at £200,000. The mortgage is £120,000 and that mortgage is supported by an endowment policy worth £50,000.

Norma has only recently told John that she has been shopping at the Chanel boutique on a weekly basis for the last year. Norma owes £160,000 on sixteen different credit cards.

Question

If Norma applies for bankruptcy (or an IVA) how much will have to be raised to enable the matrimonial home to be transferred into John's sole name?

Solution

You now know that the sum to be found is based on the value of Norma's half interest in the equity which is calculated as follows:

Comment

The property can be transferred into John's name after £65,000 has been raised to buy out Norma's interest.