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How bankruptcy affects me

Bankruptcy and my home

Declaring bankruptcy will affect your home in different ways, depending on whether you rent or own it.

This area can be complex, so before you consider bankruptcy read both the advice below and our main bankruptcy advice page. Call our helpline if you need further help or if your home doesn’t fit into one of these categories.

Renting from a private landlord and bankruptcy

You’ll usually be able to stay in your home after bankruptcy if your rent payments are up to date.

If you have rent arrears, this debt will be included in your bankruptcy. Your landlord can’t take any court action to get this money back from you, but they can still evict you.

You may be able to avoid eviction by continuing to pay the rent arrears after your bankruptcy. But in some cases, the official receiver may set up a payment arrangement called an income payment agreement which doesn’t allow you to make payments to any of your creditors directly.

If this happens, you won’t be able to repay your rent arrears, but another tenant or a friend or family member could pay the arrears for you if this would let you keep your home.

Some tenancy agreements include a clause which ends the tenancy if you go bankrupt, so check your tenancy agreement before you go bankrupt. This doesn’t mean your landlord will definitely evict you if you’re a good tenant, but it is a risk.

Private landlords often check the Insolvency (bankruptcy) Register when they take on a new tenant. This means you may find it harder to rent after your bankruptcy, and you may be asked to provide a larger deposit or a guarantor.

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Renting from a local authority or housing association and bankruptcy

You’ll be able to stay in your home if your rent payments are up to date.

If you have rent arrears, this debt will be included in your bankruptcy. Your landlord can’t take any court action to get this money back from you, but they can still evict you. This is less like to happen in social housing than with a private landlord.

The official receiver may not allow you to make any payments to your rent arrears once you’re bankrupt. But another tenant or a friend or family member could pay the arrears for you if this would let you keep your home.

If you are evicted, you may find it harder to get a private tenancy after your bankruptcy, and you may be asked to provide a larger deposit or a guarantor.

Bankruptcy and my mortgage

If you live in a mortgaged property with some equity, the official receiver will normally sell it. Some money from the sale will be used to pay the official receiver’s costs and some will be shared out among your creditors.

If you own your home in your sole name, the official receiver will want all of your equity. If you own your home jointly, they’ll only want your share of the equity.

Depending on how much equity is available, the official receiver may either:

  • Sell your home, or
  • Put a charging order on your home so they get the equity paid to them if you sell your home at a later date

If you want to stay in your home, the official receiver will usually allow someone else to pay them an amount equivalent to your equity. If a friend or family member can pay the official receiver, you may be able to stay in your home.

If there’s less than £1,000 equity or negative equity in your home when you go bankrupt, the official receiver won’t sell it straight away.

Instead, your case will be reviewed two years and three months from the date they become aware of the property (usually the time you go bankrupt).
If there’s still no equity at this point, the official receiver will usually let you keep your home.

However if there’s more than £1,000 equity in your home at this point they’ll consider selling it. You’ll then have a further nine months to arrange a sale, so it could be up to three years after the date of your bankruptcy before your house is sold.

If your home is sold you’ll usually be given a year to find a rented property and move.

If you give up your home after bankruptcy and there’s negative equity, this debt will be included in your bankruptcy. You won’t have to pay it back.

Will I be able to rent a new home during bankruptcy?

You can apply to rent a home from a private landlord during or after bankruptcy. However before accepting you as a tenant, the landlord might check the Insolvency Register. This could mean you find it hard to rent a home or, you could be asked for a guarantor or larger deposit.

What is beneficial interest?

If you live, or have lived, with a partner who has a mortgaged property in their sole name, an official receiver may decide that you still ‘own’ a share of the house. This is known as a ‘beneficial interest’ in the property. In this situation an official receiver can treat the house as if you jointly owned it. If you think this might affect you, contact us for advice as beneficial interest can be complex.

Free bankruptcy advice

Make sure you get professional, impartial advice if you're considering bankruptcy. Going bankrupt has serious consequences and you could lose your home. To find out which is the best debt solution for your circumstances, try our online debt advice tool. If bankruptcy is suitable for you, we can put you in touch with our bankruptcy team. They’ll give you specialist advice based on your personal circumstances.