In bankruptcy can Your Share of the Equity in the Home Reduced or Increased in comparison with your partner?

Bankruptcy - Unequal sharing in the equity in the house and home - Can the equity be shared in different proportions?

Even if you and your life partner own a home jointly then for bankruptcy purposes it is possible that you might own unequal shares in the equity in that house, This could be of a material benefit to you as it would mean that in your bankruptcy it would cost less for your wife, husband or partner partner to buy out that equity interest.

In a legal case known as "re Pittertou"  the wife charged her then half share of the equity in her home to assist her husband in raising money to inject into his business.

The court held that it should be presumed, in the absence of contrary evidence, that the wife intended that

  • Her share should only be charged by way of security, so that if the charge were to be enforced by the lender.........
  • ........She would be treated like a surety.

The effect is that the wife is entitled to be indemnified as far as possible out of the husband's share of the property before any recourse is had to her own share.

As it stands, the doctrine applies strictly between husband and wife. It must be arguable however, that the doctrine should apply between those who live as husband and wife or even partners. In practice the doctrine commonly arises in disputes as to the entitlement of one spouse against that of the others trustee in bankruptcy.

Quite often we find that the person who is to be made bankrupt has an unequal interest in his home of much less than half the equity! If you contact us we can tell you what documents you need to collect together to evidence disproportionate sharing in the equity. We can then assist you in protecting your home before a bankruptcy order is made.

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