Protecting Assets & Family Home in Bankruptcy

Will I lose my home if I am declared bankrupt?

The general rule is that the trustee in bankruptcy can decide whether to sell the family home to repay creditors what you owe them. If the trustee has not put your home up for sale within 3 years, the equity will be transferred back to you.

Can I keep my car if I am declared bankrupt?

This depends on your cicumstances according to the Official Receiver. Ordinarily, you will be entitled to keep “tools of the trade”, i.e. your vehicle if it is necessary to you personally to carry on your employment.

Who is the trustee in bankruptcy?

When a bankruptcy order has been made, the consequence of which is that the the bankrupt’s estate (i.e. his / her assets and property) vests in the trustee in bankruptcy.

What is the bankrupt’s estate?

Your assets are likely to be sold to pay the bankruptcy debts. Once a bankruptcy order is made against you then your assets have to be handed over to the person that has been appointed to manage your bankruptcy. This person is known as the trustee in bankruptcy and it will be either the Official Receiver or an insolvency practitioner.

Which assets can you keep when you are declared bankrupt?

Ordinarily, you will be entitled to keep “tools of the trade”, i.e. tools, vehicles and other equipment necessary to you personally to carry on your employment.

You are also entitled to keep certain personal belongings such as furniture, household appliances, clothing and bedding. However, these may have to be sold by the trustee in bankruptcy if these items are worth more than a reasonable replacement.

What happens to your bank accounts in bankruptcy?

Once a bankruptcy order is made, you must provide the Official Receiver with your credit, debit cards and cheque books for the accounts which you are no longer to utilise.

Your bank accounts will likely be frozen and controlled by your trustee. The trustee may provide your certain sums during the bankruptcy if you need money urgently, for example for food or will release the share entitled by a partner if it is a joint bank account.

What happens to your pension in bankruptcy?

Ordinarily, you are normally entitled to any money that you have deposited as a pension.

Can I stop the sale of my home?

The home is the key issue that concerns many of our clients who have had a bankruptcy order against them. Each individual case is different therefore it would be remiss to provide general advice here, if you call us on 02071830529 and provide us with the facts of your case, will be able to arrange a conference with a senior member of our team to provide you with advice and whether your home can be protected.

Generally speaking, the trustee in bankruptcy can decide whether to sell the family home to repay creditors what you owe them. It is likely that your equity in the home (your share after any secured debts i.e. the mortgage) will be transferred to the trustee to dispose of it for the benefit of your creditors. If the trustee has not put your home up for sale within 3 years, the equity will be transferred back to you.

If certain facts apply, you may be able to prevent the sale of your home. For example, if your equity stake is less than £1,000; the equity can be sold to a partner.

You are also entitled to delay the sale of your home for up to 1 year if you need to organise somewhere else to reside for your dependents such as children or your partner.

You should seek specialist bankruptcy advice as soon as possible as early contact from a law firm to the trustee / Official Receiver may be able to prevent them serving a Possession Order on you for your family home. You should not ignore the possibility that your home may be sold. The trustee will not simply forget that your home is part of the bankruptcy asset. Remember, the trustee’s duty is not towards you or your family but to your creditors. Therefore if it is in the creditor’s best interests that your property is sold, then the trustee will consider that option.

To prevent or delay a possession order or a forced sale of the family home, contact us as soon as possible.

Book an Initial Consultation with Expert Bankruptcy Solicitors and Barristers

We are a specialist City of London law firm made up of Solicitors & Barristers and are based in the legal heart of London in Middle Temple (one of the four prestigious barristers’ Inns of Court) adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding bankruptcy including defending bankruptcy petitions; managing bankruptcy applications (including annulments); advising on bankruptcy petitions and offences; and liaising with the Official Receiver.  Whilst we are based in London we provide national coverage across all Courts in England & Wales. We offer free initial telephone advice on bankruptcy matters.

Our expert Bankruptcy Solicitors & Barristers provide professional and specialist legal advice to guide you to the best legal outcome. Our team of London lawyers are based in Middle Temple adjacent to the Royal Courts of Justice. For your case assessment and for more information about our legal services get in touch using our online form, ☎ 02071830529 or email us on bankruptcy@lexlaw.co.uk.
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