Update on dealing with properties in Bankruptcy
January 27, 2019
Posted by: Jim Stafford
Chris Lehane, the Official Assignee (“the OA”), gave a very useful talk this morning to the Association of Personal Insolvency Practitioners on the very technical issues arising on dealing with family homes and investment properties in a bankruptcy.
Some of the useful “takeaways” from the talk were the following:
- The OA has 3 years to deal with the family home.
- Given that the OA has 3 years to deal with the family home, it was interesting to review his statistics for bankruptcies in 2015. Of the 478 bankruptcy adjudications in 2015, 195 had no interest in a family home, 165 had an interest in a family home which remained in negative equity and which the OA was re-vesting in the Debtor, and only 30 debtors had positive equity.
- Of the 30 debtors who had positive equity, 14 were resolved “informally”, and the balance to be resolved through solicitors.
- A cohabiting couple with children, who are not married nor in a civil partnership (as defined under the 2010 Act), are not, for the purposes of the Bankruptcy Acts, residing in a family home nor a shared home. The property is the Bankrupt’s PPR and can be sold by the OA without going to Court.
- If there is equity in the family home, the OA will provide the spouse with an opportunity to buy the equity. He will accept staged payments up to a maximum of 12/24 months. (The OA did not disclose his negotiating tactics for dealing with the equity in the family home!)
- The OA will participate in assisting Bankrupts to avail of the Mortgage to Rent Scheme. To date he has only received 18 approaches on the Scheme. My view is that whilst it is possible to participate in the MTR Scheme via bankruptcy, a better solution for some people would be to avail of the Scheme via a Personal Insolvency Arrangement.