Question:My husband is bankrupt, and his trustee in bankruptcy wants to sell our house. What can I do to keep my home?
© Malcolm Willett (www.willett-ink.co.uk)
Answer: Your husband’s assets, including his interest in the house, are vested in his trustee.
That means that they belong to his trustee, who will usually sell such assets to pay creditors and the costs of the bankruptcy.
Whether you own your home jointly with your husband or not, I would expect the trustee to try to sell their interest in the house to you.
If you cannot afford to buy it, you can voluntarily market it, or vacate to enable the trustee to sell it.
The trustee has three years from the date of the bankruptcy order to deal with your home. If you have not agreed a plan with them within two years you will probably receive a court application seeking possession.
To prevent a sale, you will need to agree to pay to the trustee the value of their interest. If your house is jointly owned, that interest may be 50 per cent of the total “equity” (the amount left after repaying any mortgages).
The amount you have to pay may be reduced if you show that you paid more towards the purchase price, property improvements or mortgage repayments, or if your husband secured personal debts (including business debts) against your home.
The price you pay to buy out the trustee will reflect all those adjustments. As property prices are currently deflated, if you can afford to buy it, you will get a better deal now than in recent years, and the trustee may be more willing to negotiate. These can be complicated issues and you should take specialist legal advice as early as possible.
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If you have a question for Fiona McNulty, email firstname.lastname@example.org. We regret that questions cannot be answered individually.
Fiona is a partner in the property team at Thring Townsend Lee & Pembertons Solicitors www.ttuk.com.