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How bankruptcy affects me

Bankruptcy and my home

Bankruptcy affects your home in different ways. This depends on whether you rent or own it.

Before you consider bankruptcy, you should read both:

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Maybe it is a strain to keep on top of monthly spending. Or you don't know what to do when your fixed rate mortgage ends.

Together, we can look at your situation and unlock your options.

Read our homeowner guides.

Renting during bankruptcy

Will my landlord evict me?

Some rental contracts have bankruptcy clauses. This is sometimes called an "Insolvency clause".

They give the landlord the right to:

  • End the agreement
  • Refuse to renew you tenancy
  • Refuse to continue your tenancy

This means you may risk losing your home.

Your landlord only knows about your bankruptcy if it includes rent arrears.

How do I deal with rent arrears if I go bankrupt?

Rent arrears are included in bankruptcy. Your landlord cannot take court action to get them from you.

But they do not have to keep renting to you.

The rent arrears can be paid in different ways.

The official receiver may set up an income payment agreement

  • This stops you making direct payments to any of your creditors
  • You cannot repay your rent arrears
  • But someone else could pay the arrears for you. This could be:
  • Another tenant
  • A friend
  • A family member

You may want to ask someone to be a guarantor for you. Find out more about guarantors for rent..

Can I rent a new home during bankruptcy?

Bankruptcy impacts your credit rating.

This means Landlords may ask you to:

  • Provide a larger deposit
  • Have a guarantor

This can make it harder to rent.

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Renting from a local authority or housing association and bankruptcy

You can stay in your home if your rent payments are up to date.

Arrears are included in your bankruptcy. You may need to stop making payments to them when you go bankrupt.

Your landlord cannot take court action for the arrears, but they can evict you.

This is less likely in social housing.

You can ask someone else to pay the arrears if it would keep you in your home.

This could be:

  • Another tenant
  • A friend
  • A family member

Bankruptcy and my mortgage

Anyone else named on the mortgage needs to know before you go bankrupt.

Your share of any equity in the property will be paid into the bankruptcy.

  • Equity means the value of the amount of the property you own
  • Any equity of a joint owner is not paid into the bankruptcy

The trustee tells your mortgage lender you are bankrupt.

  • They may consider repossession
  • This means they could take back your home
  • They can do this even if you are up to date with your payments
  • It is more likely if you are behind on payments

The trustee could also sell any property you own.

  • They have up to three years from the date your bankruptcy is granted to deal with the property
  • They will decide whether to sell based on the amount of equity in your property

Your share of equity in property can be claimed in one of these ways:

  • The trustee can sell your property
  • The trustee could secure a charging order against your property
  • This means you pay the charging order plus interest when you sell in future
  • You or someone else could offer to buy your share of your equity
  • You do this after your bankruptcy ends
  • You agree a price with the trustee
  • It is returned to you if you have little or no equity

What is beneficial interest?

You may have ‘beneficial interest’ in a property that:

  • You live in with someone who owns it in their sole name or
  • You have lived in with someone who owns it in their sole name

This entitles you to a share of the equity because you made financial contributions to the property.

Your official receiver can ask for the equity from your beneficial interest to be paid into the bankruptcy.

A court usually decides if a beneficial interest exists.

Free bankruptcy advice

Use our online debt advice tool to make sure this is the best solution for you.

Our specialist team will support you the whole way through.