If I Go Bankrupt Can the Official Receiver Sell a House Owned in Joint Names?

If you are declared bankrupt, we consider what will happen to a property which you own jointly with someone else.
One of the main issues surrounding the bankruptcy process is how a property that you own is dealt with by the official receiver (OR).
The general rule is that the OR is required to release any equity that you own in the property so that this money can be used to repay your creditors.
This situation still stands if you own your home in joint names with someone else. Any equity in the property is of course divided between the owners. However the OR still has a duty to realise whatever portion of the equity is yours.
Even if the other owner(s) want to keep the property, the OR has the ultimate right to force a sale against their wishes if this is the only way of releasing your equity.
Different options
The action that the official receiver will decide to take is firstly dependent on the amount of equity that there is in the property.
If the property is in negative equity, there will be absolutely no point in the OR trying to sell it. In this case, it is normally possible for you to buy back your part of the title to the property from the OR for a nominal sum (generally £1) plus the solicitor's fees.
However, the OR does not have to agree to sell you back your title immediately. If they feel it is likely that the property will rise in value in the near future, they can hold on to your title for up to 2 years and 3 months to see if the situation changes.
If after this time negative equity remains or the equity is still less than £1000 the property will simply be returned to you.
Where minimal equity exists
If at the time you are declared bankrupt, there is some equity in your property but this is minimal, the joint owner can offer to buy back this equity and your title to the property.
The amount paid must be equal to the value of the equity. The official receiver will generally not accept a lower amount.
If you and the joint owner of the property cannot agree on buying back the equity at that time, the OR will simply retain your title to property for up to a maximum of 2 years and 3 months.
After that time the property will be re-valued. Again you or the joint owner can then chose to buy out the OR's ownership of the equity.
If you cannot afford to do this and the equity has not grown significantly, the receiver will take a charge against the property for the total value of your share of the equity and then hand back your ownership to you.
If the equity has grown significantly, the OR has the right to then force a sale to release your portion of it.
As such, if you believe property prices in your area are going to rise in the near future but you do not have the money to buy back your equity immediately you need to take further advice.
Dealing with more significant equity
If you property has a significant amount of equity in it, then you must not declare yourself bankrupt unless you fully understand the implications.
In this scenario, the question is always what is significant equity? Ultimately this will differ from case to case. However as a rule of thumb, if after separating your portion of the equity from the other joint owner(s), the official receiver still believes they could realise a return for your creditors by forcing a sale, they will consider pursuing this option.
It is important to understand that in this scenario, the OR has the right to force the sale of the property even if the other owner wants to keep the home!
Of course the OR does not want to force a sale as this process could well be costly and erode the amount that is eventually made available for your creditors.
The OR would prefer if the other owner of the property or another third party was able to offer a reasonable lump sum to buy out their claim on your equity so the ownership of the home could simply be returned to you.
However if no offer is made or no agreement can be reached, they are then likely to press for the house to be sold. Of course in this scenario, the other joint owner(s) would be returned their portion of the equity released after the sale.
Joint ownership offers no protection
It is very important to understand that if you declare bankruptcy as a homeowner, the official receiver has a duty to realise any equity you own in your property.
If you own the property in joint names with someone else, even if this party wants to keep the house and does not want to sell, this will not prevent a sale from going ahead where the OR feels it is appropriate.
If there is minimal equity in the property, it is possible that the OR will not force a sale but simply put a charge on the house and then return it to you.
However where more equity is involved, the other party has to buy out the OR or face having the property sold against their wishes.

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What Everyone In Debt Should Know

A debt management program is necessary for those who are unable to control their debt. More and more people are struggling with finances, which is inevitably leading them to a place of financial heartache. Without the necessary credit education, people are unwillingly to continue to fall further in debt.
What Happens When You're In Debt?
Chances are that you've experienced what being in debt feels like and if so, you've learned that it's not the best feeling. When you fall into debt, your credit score drops and as a result, you look bad to potential employeers. Most individuals who are currently in debt are unable to get ahead in life. When you've got bad credit, you can't buy a new home, purchase a new car, or apply for a better job because part of the end result has a lot to do with your credit score. Basically, when you're in debt, you're limited.
Finding a Good Debt Management Program
The first thing that you can do is try to locate a legitimate credit counseling company. With a professional debt management company, you can learn everything you need to know about getting out of debt, saving money, budgeting, and ultimately setting yourself free from your current financial prison.
Debt Companies - Where to Find Them
Since it's quite possible that you've never actually thought about hiring a debt management company to help you to take care of your finances, it's most likely also possible that you have no idea where to look. First, it's best to look online. The reason is because you are able to compare different rates and check out various websites. If you have a local business in mind, be sure to check out their website first and check under the "FAQ" section of the website. The good news is that you don't have to settle for local debt management programs. You can also obtain a credit education and counseling from purely online companies as well.
What to Look For In a Company
First and foremost, it's best if the company you are considering has a direct contact number. There is a good chance that you'll have some additional questions after looking over the website. Most people don't even look over the website but would much rather shoot straight to the punch and call the company themselves. You should also check to make sure that the company you are considering is accredited by the Better Business Bureau. Doing so will let you know that the company being considered is a legitimate business. It also makes it easier for you to check to see if there have been any recent complaints.

Consumers Pay Credit Cards Before Mortgages

Data shows this phenomenon was even more pronounced at the end of 2010, long after industry experts had expected patterns to return to normal. TransUnion said that 7.24% of American consumers who had at least one credit card and a mortgage were thirty days late on the mortgage payments but current on their credit card payments at the end of 2010. In the first quarter of 2008, when the change was first seen on a national basis, only 4.3% made credit card payments first.

"This goes against conventional wisdom and that has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages," Sean Reardon, the author of the study and a consultant in TransUnion's analytics and decisioning services business unit, said in an interview. This shift in traditional payment trends reflects the spike in unemployment and the simultaneously sharp decline in home values across the country.

"As long as housing problems persist and unemployment is high, things are likely to stay flipped," said Reardon.

The states where this situation is most pronounced are Florida and California, the two hit hardest by the housing crisis. Both these states noticed this phenomenon earlier than the rest of the country, during the third quarter of 2007.

The factors influencing this trend are many. For one, it is usually far easier to pay a credit card bill than a mortgage payment. If consumers don't have enough to pay the full mortgage payment, they will likely put what little money they have towards paying the lower credit card bill in full. The old story of the squeaky wheel getting the grease may come into play here as well. Some feel that the constant harassment which can occur regarding credit card debt may influence consumers to pay that debt off just to get the bill collectors off their back.

Tighter banking regulations are making it difficult for banks to manage the accounts of risky customers, and they will now shut a card down if a consumer misses one or two payments. After six months, the account is written off as uncollectable. By contrast, it can take a year or more after the first missed mortgage payment before a house is foreclosed. Consumers feel that gives them more time to try to solve their financial problems. Therefore, consumers will juggle their credit card and mortgage payments in order to attend to daily necessities until eventually they run out of time. Having still not recovered financially, they cannot come up with enough money to stop the house from going into foreclosure at that point.

Also, consumers who are having financial difficulties will often use credit cards to pay for utilities, buy food or for emergencies. You can't buy those with a house.

The big question is whether or not credit cards will remain a higher priority for cash strapped consumers. Of consumers who defaulted in the last three months of 2010, 52% defaulted on their mortgages but kept their credit card payments current, while 22% defaulted on credit card payments but kept their mortgages current.