Your home is often the biggest concern when thinking about bankruptcy. What happens depends mainly on how much equity you have, and whether someone else can buy out your share.
The short answer
- When you go bankrupt, your share of your home passes to your trustee.
- If there’s significant equity, the trustee may seek to sell it.
- A partner or relative may be able to buy out your share.
- If equity is under £1,000, a court won’t usually order a sale.
- The trustee has three years to deal with your home, or it usually returns to you.
What happens to my home in bankruptcy?
Your beneficial interest in your home, meaning your share of the equity, vests in your trustee. That’s usually the Official Receiver at first. The trustee’s job is to raise money for your creditors, and equity in a home is often the biggest asset.
What are the options?
- Sale: the trustee may apply to court for an order to sell, often with a delay of up to a year if you live there with family.
- Buy-out: a partner, relative or friend can buy your share from the trustee.
- No action: if equity is low, the trustee may decide not to act.
What is the three-year rule?
The trustee usually has three years from the date of the bankruptcy to deal with your interest in the home. If they don’t act, it normally returns to you.
Is an IVA better for homeowners?
For many homeowners, an IVA is designed to let you keep your home. Under the current IVA Protocol, your home isn’t included and you won’t be asked to remortgage. See is an IVA better than bankruptcy?
Common questions
Can I keep my house if I go bankrupt?
Possibly, if you have little or no equity, or if someone can buy out your share from the trustee.
What if I rent my home and go bankrupt?
Bankruptcy doesn’t automatically end a tenancy. See renting and bankruptcy.
What happens to my partner's share of the house?
Only your share is affected. Your partner keeps their share, but a sale could still affect them if the trustee gets a court order.
Getting help
You don’t have to deal with debt on your own. Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. If you want to talk through whether a formal solution such as an IVA could be suitable, you can also get in touch with us.