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WHAT PROPERTY CAN I KEEP IN BANKRUPTCY?
By: Peter Arthur

Typical examples of property that you can keep: a car, if subject to finance and with little equity clothes household goods and furniture appliances your principal home, if and only if there is little or no equity personal effects jewellery professional tools income from social security, disability, public assistance, unemployment some pension funds, child support and maintenanc.

Please note that in all of the above cases property can be retained where it is the subject of a Charge or is purchased on hire purchase (for example a car) and if there is no or little equity in the property. In addition, it should also be noted that if any of the above listed items are of particular value, for example valuable jewellery or furniture then they will properly fall into the bankruptcy.

In relation to matrimonial homes, it should be stressed that even if there is substantial equity in the property, the Trustee in bankruptcy cannot ordinarily repossess the property within one year of the making a Bankruptcy Order. This will not however prevent a charge holder (i.e. the mortgagee) commencing repossession proceedings. In many cases property will be co-owned by the debtor’s spouse. The Trustee in bankruptcy will ordinarily approach the debtor’s spouse in order to ask whether he or she wishes to purchase the interest of the debtor’s failing which, possession proceedings will ordinarily commence after the one year time limit as set out above. Neither the bankruptcy nor an IVA will prevent a lender from repossessing your home if it is subject to a mortgage charge.

During the course of the life of the interim Order, it is possible that the Courts will prevent repossession proceedings from continuing. An IVA may be a better way forward as ???????? will provide a greater recovery for creditors than would have been the position in a bankruptcy. They will also usually make provision such that the mortgage lender is paid in full.

In the case of a bankruptcy, whilst you may be able to remain in possession of the matrimonial home for a minimum of one year, after that year has expired, possession proceedings are likely unless either there is no equity in the property or a third party such as a spouse could buy out the Trustee in Bankruptcy’s interest i.e. the debtor’s equity in the property. Following a discussion of the difference between a bankruptcy and IVA in relation to a matrimonial property is tape stops here.