Will I Lose My House if I Go Bankrupt?

We always carefully consider the options and evaluate all assets that can help service the debt. 

Our aim is to help you achieve the best outcome as quickly as possible. The law makes it clear that all assets and liabilities need to be accounted for, but it also makes provision for all considerations to be fair. The bankruptcy process aims to ensure all liabilities are paid via an equal distribution of assets the trustee has raised.

There Are Ways to Keep Your Home

We always try and find ways to help our clients raise all the required assets needed to service their debts without selling their homes. Working with many clients over the years, we understand the human element and always aim to give the best advice in cases where a family home might need to be sold. Fortunately, there are ways to use the law frameworks to prevent you from selling your home in bankruptcy. There are, however, multiple things to consider carefully, and they include the following:

Consideration | The Value of Your House and How Much You Owe the Bank

The appointed trustee will always try to establish the amount of equity in any asset to see how much can be derived from it to service outstanding debts. The house could be attached if your home has enough equity and all your other assets do not raise the necessary amount.
If there is a mortgage on the house, then the bank will be entitled to be paid out first to cover the remaining bond. After the mortgage is paid, you can channel the remaining equity toward the bankruptcy process.

Consideration | Is There Co-Ownership Involved?

Can jointly-owned property be seized? There are options available if you and your partner have a joint mortgage on the property registered in both of your names. If the trustee finds enough equity in the house after subtracting the mortgage costs, you will own half of the remaining equity.
To prevent selling the house, you would need to raise that 50% of the remaining equity and pay it towards the bankruptcy pool. This will then exclude your home from the trustee’s list of assets, but it will transfer complete ownership of the house to your partner.

Consideration: Sometimes Selling Your Home Is the Sensible Choice

This is not the most straightforward situation to deal with, especially if the house in question has a lot of sentimental value to the family. We understand this and will always approach any sale of assets with the greatest care and the sensitivity it deserves.

With our years of experience, we can help provide fresh insights you may not have been able to do alone.

If your home is completely paid up and has all the required equity to service all your debts, it can make sense to sell it and take the remaining money left towards a new purchase.

Keep Your Home and Refinance It to Raise the Capital You Need

On the other hand, if we take the same scenario where a paid-up property has enough value to service all the debts, you could consider a refinancing option like a second mortgage versus the sale of the home. This second mortgage will raise the capital needed to pay your creditors, offer you more affordable repayment plans, and be an option that will have the least disruption on you and your loved ones.

“Will I Lose My House in Bankruptcy?

This is a common question we get asked all the time. We understand the situation and empathise with how much stress and upheaval would be caused by selling the family home. We’ll work to find the best solution for you regarding all your assets within the framework of the law and try our best to ensure your family home is secure.”