If I Declare Bankruptcy, Will I Lose My Home?
Bankruptcy may be the best solution for many who are struggling with debt. However they are put off because of a false impression that they will lose their home.
If you are struggling with serious debt the way to resolve the problem could be to use a debt management solution. When considering such solutions, you may think about both a debt management plan (DMP) or individual voluntary arrangement (IVA). However the option of bankruptcy may well be discounted.
If you have a significant amount of personal debt, declaring bankruptcy will enable to write off your debt entirely. It is also likely that you will not be required to make any monthly payments to your creditors.
Despite these advantages, many people discount bankruptcy as a solution because they believe that they will lose their home. However, in many cases this is just not the case.
Will the Official Receiver sell my house?
If you own your home, the amount of equity in the property will be vital in deciding whether bankruptcy is appropriate.
If you have equity in your home (5,000 or more as a rule of thumb), bankruptcy may not be for you. There is a risk that the official receiver will be required to realise such equity which could result in the forced sale of the property.
However, if you have little or no equity, or your property is in negative equity, it is extremely unlikely that you will lose your home. This is because there is no value in the property (known as beneficial interest) for the official receiver.
Where this is the case it is possible to buy back the beneficial interest for the nominal sum of 1 plus legal fees which are currently 211. Normally the Official Receiver will suggest buying back the beneficial interest in a property after about 2-3 months. Buying back the beneficial interest will stop the official receiver from forcing the sale of your property.
How will the mortgage company react?
As long as you maintain your mortgage payments, your mortgage company will not be concerned that you have declared bankruptcy. Even of the bank has lost money because of unsecured loans which were written off, they will want to maintain the mortgage agreement as this is very profitable business for the bank.
What if I rent my property?
If you rent, it is very unlikely that you will lose your home if you declare bankruptcy. Tenants should be aware that their landlord will be automatically told of their bankruptcy. However, this does not generally cause any issue.
Council and Housing Association landlords will not be concerned if you declare bankruptcy as long as you are in a position to maintain your rent payments. Private landlords will also generally have no problem as long as their rental payments are maintained.
Bankruptcy is an extremely useful solution for many people who have serious debt which they are not in a position to repay. However, many people are not taking advantage of this solution because they believe that their home will be at risk.
Very often this is just not the case and should not prevent the use of this as a way to resolve debt problems. However, as with all personal debt solutions, it is important to get advice from an expert before making a decision on how to proceed.
If you are struggling with serious debt the way to resolve the problem could be to use a debt management solution. When considering such solutions, you may think about both a debt management plan (DMP) or individual voluntary arrangement (IVA). However the option of bankruptcy may well be discounted.
If you have a significant amount of personal debt, declaring bankruptcy will enable to write off your debt entirely. It is also likely that you will not be required to make any monthly payments to your creditors.
Despite these advantages, many people discount bankruptcy as a solution because they believe that they will lose their home. However, in many cases this is just not the case.
Will the Official Receiver sell my house?
If you own your home, the amount of equity in the property will be vital in deciding whether bankruptcy is appropriate.
If you have equity in your home (5,000 or more as a rule of thumb), bankruptcy may not be for you. There is a risk that the official receiver will be required to realise such equity which could result in the forced sale of the property.
However, if you have little or no equity, or your property is in negative equity, it is extremely unlikely that you will lose your home. This is because there is no value in the property (known as beneficial interest) for the official receiver.
Where this is the case it is possible to buy back the beneficial interest for the nominal sum of 1 plus legal fees which are currently 211. Normally the Official Receiver will suggest buying back the beneficial interest in a property after about 2-3 months. Buying back the beneficial interest will stop the official receiver from forcing the sale of your property.
How will the mortgage company react?
As long as you maintain your mortgage payments, your mortgage company will not be concerned that you have declared bankruptcy. Even of the bank has lost money because of unsecured loans which were written off, they will want to maintain the mortgage agreement as this is very profitable business for the bank.
What if I rent my property?
If you rent, it is very unlikely that you will lose your home if you declare bankruptcy. Tenants should be aware that their landlord will be automatically told of their bankruptcy. However, this does not generally cause any issue.
Council and Housing Association landlords will not be concerned if you declare bankruptcy as long as you are in a position to maintain your rent payments. Private landlords will also generally have no problem as long as their rental payments are maintained.
Bankruptcy is an extremely useful solution for many people who have serious debt which they are not in a position to repay. However, many people are not taking advantage of this solution because they believe that their home will be at risk.
Very often this is just not the case and should not prevent the use of this as a way to resolve debt problems. However, as with all personal debt solutions, it is important to get advice from an expert before making a decision on how to proceed.
