IF THE BANKRUPT LIVES IN A RENTED ACCOMMODATION and is not behind on rent payments, there should be no cause for concern. However, if there are arrears in payments, such debt is covered by bankruptcy. In such a case, the bankrupt will not have to repay the outstanding rent to the landlord but must be prepared for an eviction order. The Official Receiver may allow the bankrupt to repay the arrears and – if the landlord agrees – the bankrupt may remain in the rented accommodation. However, it is essential to check the tenancy agreement. Sometimes the agreement contains a clause stating that in the event of the tenant’s bankruptcy, the agreement is automatically terminated, and the tenant must vacate the premises. Additionally, one must be aware that after bankruptcy is declared, there may be difficulties in renting a new property because the bankrupt’s credit score has been significantly lowered.

• If the bankrupt is the sole owner of the property, the Official Receiver will take over the property. It can be sold, with the proceeds used to repay the mortgage lender, and any remaining funds allocated to cover the Official Receiver’s costs and potentially pay off creditors. If the equity (ownership capital) is negative, meaning the mortgage debt exceeds the property’s value, the remaining debt owed to the bank falls under bankruptcy, and the bankrupt does not have to repay anything after selling the house. • If the bankrupt is a joint owner of the property, the Official Receiver will only take over the bankrupt’s share of the property – for example, 50%. If the bankrupt wishes to remain in their home, third parties may buy out their share from the Official Receiver. The buyout price will depend on the amount of equity and whether it is positive or negative. Often, these amounts are very small.
• If at the time of bankruptcy the equity in the home is less than £1000 or negative, the Official Receiver will not sell it immediately. Instead, the Official Receiver will assess the property’s value for two years and three months from the date of the bankruptcy order. If after this time there is still no higher equity, the Official Receiver will most likely allow the bankrupt to retain the property. • If the equity increases after this period and exceeds £1000, the Official Receiver will consider selling it. The bankrupt will then have nine months to sell the property. Consequently, it may take up to three years from the date of bankruptcy declaration before the bankrupt’s house is sold.