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When you have reviewed
the "determining your share
of the equity" section and have all of the relevant
documents to hand, you are able to now transfer the equity
to your spouse. It would be dangerous to do this however,
without specific advice.
You are able to do
this either pre or post bankruptcy.
To transfer the equity
pre bankruptcy, you have to effectively "sell" your share
to your spouse. This will involve either a re-mortgage or
your spouse raising an unsecured loan to purchase your share.
NEGATIVE EQUITY
If there is "negative
equity" in the property you may wish to do one of two things.
You may wish to hand
the keys back. If so, the full amount of any loss the mortgage
company makes will be written off in the bankruptcy or
If practical, you
may wish to retain the property. (Be careful, if your spouse
is also named on the mortgage, that person will become responsible
for the full amount owing.)
To retain the property
and to protect it from future attack by creditors you can
either:
Transfer the "legal
interest" to your spouse, or other person (by using a solicitor)
If the mortgage company
will not allow you to transfer the "legal interest" then it
is possible to achieve a similar result by transferring the
"equitable interest" (by using a solicitor).
You will remain responsible
for repaying the full amount on all the mortgages if you retain
the property.
NIL EQUITY
If there is "nil equity"
in the property and you wish to retain that property then
you need to transfer the interest in the property by agreement
with the Official Receiver. It is common practice that the
Official Receiver allow you to transfer the interest for a
nominal amount plus the Official Receivers legal fees.
SOME EQUITY
If you have some equity
in the property you need, first of all, to determine "your
share" of the interest in the property (see
"determining your share")
In a bankruptcy the
Official Receiver or Trustee in bankruptcy will wish to receive
from your spouse the amount of your share in the equity. On
receiving such amount the O.R will then consent to the transfer
of either the "legal interest" or the "equitable interest"
in the property. You are effectively selling your interest
in the property to your spouse.
Should the transfer
take place pre bankruptcy, it must be done via a solicitor
using those documents referred to in "determining your share".
Should the transfer
take place post bankruptcy, then the Official Receiver will
instruct solicitors to act on his behalf.
A person who has been
made bankrupt generally has 12 months from the date of the
bankruptcy order is made to have his share purchased by his
spouse. Should the interest not be purchased within the 12
month period, the Official Receiver or Trustee in bankruptcy
is within his rights to apply to the court for an eviction
order. The house will then be sold at auction to realise the
equity for the benefit of your creditors. The
Official Receiver would then pay to the bankrupt spouse half
of the sum realised, if that spouse had a half interest in
the property.
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