If you are facing bankruptcy and you own your home, the main concern is not to lose your property. For individuals who own their own business and home, proper structuring from the outset is vital.
If you have accrued debts which you are unable to pay as and when they fall due, it is probably too late to review such measures but there are ways in which you can still save your home from bankruptcy. In certain circumstances, you may need to re-mortgage or sell your property to pay off your debts.
It is important to know of all the options available to you prior to filing for bankruptcy. Most individuals facing bankruptcy are usually the directors of small businesses because they have invested personal funds into the business for ongoing trading and then for some reason the business has incurred financial problems with considerable debt.
Trying to save your home before bankruptcy
Firstly, looking at ways you can re-finance and/or raising funds on your existing property is the first port of call. Alternatively, you could consider transferring or selling your share of equity in your property to your spouse or a family member. But remember, you must ensure that the sale is of fair value and the purchase price is paid.
Trying to save your home during bankruptcy
During the bankruptcy, there are still ways in which you may be able to save your property.
It is important to act quickly if you wish to consider arranging a related purchase of your property interest from the Official Receiver or trustee in Bankruptcy. The property is automatically vested in the trustees upon their appointment and their details are registered on the title deeds, as a restriction on the property.
In most cases, the co-owner is usually given the first opportunity to purchase the individual bankrupt estate’s equity in the property. If this is not possible, then the trustees usually aim to put the property on the market for sale but with the co-owner’s permission. If younger children are involved then the trustee will provide more time and consideration to the sale of the property.
If there is no equity in the property or only a minimal amount, the joint owner can request to purchase the interest for a nominal consideration from the trustee. If agreed, the trustee’s interest is removed at Land Registry allowing the title of the property to vest with the joint owner.
Don’t be swayed or tempted by illegal activity
If faced with bankruptcy you may be advised to think about transferring your interest in the property to the joint owner or another individual. It is imperative to note that any property transferred in this way five years prior to bankruptcy, is deemed void.
With a transfer to a connected party the trustee can investigate up to five years pre the Bankruptcy Order and two years for unconnected parties.
Next Step
If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
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