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i The advice on this page applies to residents in England and Wales only.

Bankruptcy and your assets. What happens if you declare yourself bankrupt?

One of people's biggest concerns when they go bankrupt is what will happen to their property or their car.

As one of our bankruptcy clients, this page will help answer the questions that are worrying you.

Bankruptcy and your property

What happens to your property depends on whether you have equity in it and if it's jointly owned with anyone else. Equity is the difference between how much your property is worth and the amount left to repay on the mortgage. 

The property is only in your name

As soon as your bankruptcy order is made (in other words when the court agrees to your bankruptcy) the interest in your property is passed to the official receiver. This means they'll take control of your property.

The legal title will pass to the official receiver. You won't be able to do anything with your property unless you have their permission. 

The official receiver will keep control of your property for three years from the date your bankruptcy order is made. This means that if there's money available in your property during this time they could sell it.

You jointly own the property with someone else

As soon as your bankruptcy order is made (when the court agrees to your bankruptcy) your share of the interest in the property is passed to the official receiver. This means that they take control of your share of the property.

The official receiver will keep control of your property for three years from the date your bankruptcy order is made. This means that if there's money available in your property during this time they could sell it or ask the other person to buy your share.

What isn't included in my bankruptcy?

Some of the things you own won't be taken into consideration by the official receiver and they won't be sold as part of your bankruptcy. These include:

  • Tools, books or equipment that you need if you're self-employed
  • Clothes
  • Bedding
  • Furniture
  • Household equipment like washing machines and fridges

What happens to my car if I go bankrupt?

Any vehicle you own, whether it's a car, motorbike or van, will be treated as an asset in bankruptcy. This means that the official receiver could sell your vehicle and put the money into your bankruptcy.

When the official receiver is deciding whether or not to sell your vehicle they'll look at the following factors:

Do you own the vehicle?

If your vehicle is on hire purchase or a lease agreement then it isn't your property and it'll be dealt with differently in your bankruptcy. 

If you jointly own your car with someone else then the official receiver will let the other person buy your share of the vehicle. If they can't afford to do this then the car will be sold. Your share will be paid into the bankruptcy and the other owner will be given the rest.

The official receiver normally assumes that the owner of a vehicle is its registered keeper. If this isn't the case you'd have to show them proof that someone else owns the vehicle.

Do you need the vehicle?

The official receiver will check whether or not your vehicle is essential. They go into a lot of detail when they do this check. They'll look at your local bus routes and timetables, the amount it'll cost you to use public transport compared to how much using your vehicle costs, and things like your tax, insurance, petrol and servicing costs.

If they decide that you can make the same journeys by public transport and that it's cheaper than using your vehicle then it's very likely that they'll sell it.

The official receiver might let you keep it if you fall into one of these categories:

  • You can't do your job without your vehicle - for example if you're a taxi driver
  • You live in a rural area with no, or very poor, public transport links
  • You or someone in your family has a disability that means you can't get around without a vehicle
  • You work long or irregular hours which means you can't use public transport

A word of warning: you won't be able to keep your vehicle just because it's easier to have it, or it saves you time.

Could you use a cheaper vehicle?

If the official receiver agrees that you need a vehicle they could still sell your car and tell you to buy a cheaper alternative.

Regardless of what your vehicle is worth, the official receiver could decide to sell it. They'll decide this on a case by case basis.   

The official receiver (OR)

An official receiver will administer and investigate your bankruptcy. Once your bankruptcy has been granted the official receiver will arrange an interview over the phone or face to face and they'll take control of any assets you own. 

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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