Bankruptcy and homeownership

When you go bankrupt, your ‘interest’ or share of the equity in your home will be transferred over to the trusteewho manages your bankruptcy.

Depending on how much equity you have, they could:  

• sell your home 
• get a charging order
• give it back to you if it’s a small amount  

Equity is the difference between the amount you owe on your mortgage and what your home is worth. For example, if your home is worth £200k and you owe £150k on your mortgage, you have £50k equity. If you own your home with your partner, this is typically split 50/50.

Your share of any equity might be paid into the bankruptcy – but equity from other owners won’t be included. The trustee may look to sell your property to do this or apply for a charging order so they have the right to equity if you sell your house further down the line.

If a partner or relative can buy your share of the property, you might be able to stay in your home. However, you can't just give away your share – or sell it for less than it’s worth – to stop the trustee from selling it. 

The trustee has three years to decide what to do with your home. If they don’t sell your home - or place a charging order on the property - within this time, your share of the property will be returned to you. 

Yes – a mortgage is a secured debt so won’t be included in your bankruptcy. This means if you stop making your mortgage payments, your lender may ask the court for a ‘possession order’ which lets them sell your home. 

If you're at risk of homelessness because of bankruptcy, contact your local council right away. 

They will assess your situation to determine if you qualify for rehousing support.

Make sure you tell the council your homelessness is a result of bankruptcy. 

If you lose your home due to financial problems, the council shouldn't label you as 'intentionally homeless’.

If the council says they can't help because you’re intentionally homeless, you might be able to appeal the decision.