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Bankruptcy Case Studies In Respect Of The Matrimonial
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This case study is most important.
When you have read the following on the
legal principle known as "Equity of Exoneration"
you may find that the value of the equity exposed to bankruptcy
(or an IVA) may be much less than you first thought.
Background
A property is purchased for £120,000
by Robert and Ruth, beneficially for themselves, in equal
shares.
The parties do not require the assistance
of a mortgage.
Subsequently, Robert requires £30,000
to fund a business venture.
Robert and Ruth execute a legal charge
in favour of the mortgagee.
Later the parties separate and the property
is sold for £120,000.
The principle of equity of exhoneration
would operate as follows:-
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£
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| Sale value |
120,000
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| Less: Ruths share |
(60,000)
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| |
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| Balance |
60,000
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| Less: mortgage |
(30,000)
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| Equity |
30,000
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This entire equity of £30,000 may
belong to Ruth as Robert has previously "had" his
£30,000 when a second mortgage was taken out to find
a sum to pay into his business.
Warning:
This is a very simplified explanation
of the principle of "equity of exoneration". It
is subject to many exceptions. Clearly it is essential that
you take professional advice on your particular circumstances.
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