Bankrupty and mortgages

[Sonaive]

I work with someone whose exp has gone bankrupt.

They have a mortgage together. He pays all of it. She doesnt earn enough to even think about taking it on.

The insolvancy people have written to her saying the house is now in their hands, not the exp.

She says they cannot make her leave that house or sell it. Is she correct? she has a 14yo and a 20yo dc still living at home.

Does she own part of the house? If so, they can order a sale but can't touch her share of the proceeds.

She is on the mortgage but has never paid the mortgage herself, he took care of everything like that.

I know she has to get a valuation on it.

It depends on the equity in the house, if there isn't any then she is fine. If there is a lot then they might require her to sell it.

Also, if she's never paid the mortgage or contributed in any way her share of the equity could be deemed to be less than 50%.

Your colleague really needs to consult someone like CAB urgently on this one. In the meantime Direct Gov's section on 'Bankruptcy - what happens to your home' says the following. (From the perspective of the exP in this case)

Joint ownership of a home and bankruptcy

If you share the ownership of your home with someone else you are a joint owner. The legal title and beneficial interest is not transferred to your trustee. However, there are certain restrictions called ?Form J Restrictions? that are entered in the Land Registry. This means your trustee:
?can ask the court to order you to sell your home
?can claim your share of the beneficial interest if the property is sold
?will be told of any dealings connected with your home - for example, if you attempt to sell it

I know she hasnt paid anything towards it, eg her wages went into a joint account before they split, since 2007 or thereabouts.

I dont think she has any intention of contacting anyone like CAB, shes a worry when it happens type of person.

But I keep telling her, it is happening now.

Do you think there is much equity in it? If there isn't any or only a low amount then she can make an offer to the trustee to buy her ex's share. Trustee won't do anything now until 2 years 3 months from the bankruptcy date so she doesn't have to worry yet!!

I dont know, one day she says there isnt, next day she says she reckons it's got £60,000 equity in it.

I honestly dont think she knows.

If she's a bit of a head-in-the-sand merchant she'll probably end up worse off, sadly. When it comes to matters of law and finance, her combination of assumptions and fatalism could be a disaster. If you've made a few suggestions and she's waved you away I would recommend the next step is to stay well out of it.