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You may recall from our previous e-bulletin
titled “31 March 2007 – A Big Date for the Trustee’s
Diary” that as a result of amendments introduced by the
Enterprise Act 2002, where a Bankrupt, at the time of his
bankruptcy, had an interest in a dwelling house that was the sole
or principal residence of the Bankrupt or his/her spouse or former
spouse or civil partner, the Trustee must take specified actions to
realise the Bankrupt’s former interest in the property
within three years of the Bankruptcy Order date (or before 31
March 2007, where the petition was issued before 1 April 2004).
If the trustee fails to take any of these
steps in time, the trustee will as a general rule lose his/her
interest in the Bankrupt’s family home, which will return to the
Bankrupt. In relation to bankruptcies which existed at 1
April 2004, the trustee must take one of the specified steps by 31
March 2007.
The specified steps that the trustee must take
are as follows:
- realise the bankrupt’s former interest in the
family home; or
- apply for an order for possession and/or sale
of the family home; or
- apply for an order under s.313 of the Act for
a charge on the family home for the benefit of the bankrupt’s
estate; or
- reach an agreement with the bankrupt that the
bankrupt shall incur specified liability to the estate (with or
without the addition of interest from the date of the agreement) so
the interest in the family home shall cease to form part of the
estate
Although s283A(6) of the Insolvency Act 1986
does permit a trustee to apply to court to extend the three
year time limit, whether an extension is granted will depend on the
circumstances of each case. It would therefore not be prudent
for a trustee to rely on this provision unless he has no
alternative.
In light of the fact that, in respect of
bankruptcies existing as at 1 April 2004, the trustee now has
only three months in which to take the above steps to realise
the bankrupt’s former interest in his/her family home or make an
application to extend the three-year period, if circumstances
permit, it is crucial that trustees start to take action on
these cases now.
The link here
will take you to a detailed article on our website explaining how a
trustee may determine whether he has a beneficial interest in a
property and, if so, how he may value the extent of that interest,
together with practical steps that may be taken by the trustee to
assist his investigations.
If trustees are encountering any difficulties
in ascertaining whether they have an interest in a bankrupt’s
former family home, valuing such an interest or determining how to
deal with such an interest our Insolvency and Business
Recovery team would be happy to assist.
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