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Matrimonial Home within a Bankruptcy - Example 1 

Do I have to lose my home within a Bankruptcy?  This is a question that I am asked all of the time.  

In this first example, I examine what could happen to the home should there be equity in the property:

Mr & Mrs Thomas from Newport own a property which has been valued at £150,000, there is currently £100,000 outstanding on the mortgage.  The property is registered at the Land Registry in the joint names of Mr & Mrs Thomas. 

Mr Thomas has recently been made bankrupt and they are both extremely worried about their home as they wish to continue to live there and do not want to move out. 

Mr Thomas' half equity share in the property would be calculated as follows:

                                                                            £

              Value of property                                150,000 

              Less: Mortgage                                   (100,000)

                                                                              ---------

              Total equity of Mr & Mrs Thomas       50,000

                                                                             ======

              Half equity of Mr Thomas                    25,000

                                                                              =====

To save the property, Mrs Thomas (or a third party) would have to raise the sum of £25,000.  This could be done via a re-mortgage, a loan or borrowing the money from a family member. 

Once that sum had been paid to the Official Receiver or Trustee in Bankruptcy, then the property would be classed as "realised" within the bankruptcy estate and the property could continue in the ownership of Mr & Mrs Thomas.  Of course, the mortgage payments would need to be maintained in order that the mortgage company does not re-possess the property. 

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