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abbsyw
Starting Member
2 Posts |
 Posted - 15 May 2009 : 14:13:31
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| I own a house with a lady who is thinking of declaring herself bankrupt. How will this affect me and our house? |
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John
New Member
United Kingdom
73 Posts |
Posted - 15 May 2009 : 14:43:03
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Hi
assuming you both own 50%, if this person declares bankruptcy the trustee will be compelled to realise 50% of the equity in the property for the benefit of her creditors.
This can be done by you or any other nominated 3rd party of her choice paying a sum equal to the value of her share to the trustee. If this is not a possibility then the trustee will eventually force the sale of the property and hand you 50% of the equitable receipts.
After the mortgage and any other secured loans are paid, you will be given back 50% of the balance. All associated costs such as estate agents and solicitors fees will be paid from her half and the rest will be claimed by the trustee.
Your particular problem is that the trustee may not be too worried about selling at the true market value which will seriously affect the sum eventually passed to you.He will prefer a quick sale at a lower price than to wait indefinitely.
If you are in a position to purchase the ladies equitable share then you should make your interest known asap once the details of the trustee dealing with her bankruptcy are known.
John White
England Jackman & Spacey |
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abbsyw
Starting Member
2 Posts |
Posted - 15 May 2009 : 16:05:20
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Many thanks for your response.
The house is in negative equity. Does this affect the situation at all?
Also, as a seperate matter, I understand that if you declare bankruptcy then all of your earnings for the next year go to the trustee who, in turn, shares this out amongst the creditors as necessary. What happens if she doesn't have a job or changes jobs or leaves the country? All of which are highly likely!
Many thanks again.
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John
New Member
United Kingdom
73 Posts |
Posted - 15 May 2009 : 18:46:03
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Hi
if the property is in negative equity then once the details of the person dealing with her case are known you should write to them confirming that you are the joint owner (they will check this anyway) and advising that you wish to purchase her beneficial interest in the property when they come to deal with it.
You will be offered her beneficial interest for the princely sum of £1 plus £211 in legal fees.
This does not exonerate her from the responsibility of the mortgage repayments but it does mean that all future equity is yours.
A bankrupt is required to contribute towards their debts only if a) they have an income b) they have disposable income of more than £99 per month after having met all of her essential household expenditure needs. If this were the case and sufficient levels of disposable income were present the payments would last for 3 years, not one as suggested.
Nobody can force a bankrupt to work or gain extra work because of their position. So she has no worry there. However, if she does not contribute to the mortgage repayments then you would be obliged, as the joint mortgagee, to meet the full cost of the repayments or face repossession.
The consequences of repossession are that if the lender sells the property for a sum which does not redeem the full outstanding mortgage then you could now be facing bankruptcy too as unless you declare bankruptcy in this instance you are personally liable for any shortfall between sale price and mortgage owed. The joint owner would not be as she has already declared bankruptcy.
John White
England Jackman & Spacey |
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I own a house with a lady
