The bankruptcy application says “It is very unlikely that items you need for your daily life (eg washing machine, sofa, refrigerator) will be sold“.
Here are a selection of questions here that people have asked about what may happen to the things they own if in bankrupty.
I may not have mentioned your exact situation, but the answers here try explain how the Official Receiver makes decisions, so you can work out what is likely to happen.
Contents
The OR only wants to know about things that are worth more than £500
On the bankruptcy application, you have to list things you own that are worth more than £500.
The two key points here are:
- you have to own it. If it belongs to someone else, you are not the owner.
- what something is worth now is what you could sell it for. It doesn’t matter what it originally cost.
Most things in your house have very little second-hand value. The carpet in your bedroom may be fairly new and good quality but if you – or the official receiver – sold it, it would fetch almost nothing.
So if you are worried about a specific item, try to find a similar one for sale, for example on eBay.
Some of the language you may see used about bankruptcy on the internet sounds very alarming. “The Official Receiver will take control of your assets”…
But for the vast majority of people, bankruptcy is a non-invasive procedure. No one comes to your house to make a list of the things in it.
Will I lose my lawnmower?
A lawnmower is a basic piece of domestic equipment – most people with gardens have one.
The Official Receiver’s general approach is that you will be able to keep normal domestic objects providing they aren’t worth more than reasonable replacements. This applies to clothes, furniture, carpets, bedding, electrical goods etc. Most people who go bankrupt do not lose ANY domestic possessions.
So your lawnmower is that it is almost certainly safe. The Official Receiver is unlikely to be interested in it unless it is very new and expensive.
If you have recently bought a splendid ride-on mower then it will be at risk, but a normal mower, no.
Can I keep my caravan?
The answer here is probably No.
It isn’t essential, even if it lets you have a cheap holiday every year. You will need to list it on your bankruptcy application unless you are sure it is worth less than £500.
One option might be for a relative to buy your caravan from the OR and let you use it. If you want to do this, list the caravan as one of your assets on your bankruptcy forms and include its second-hand value. Then at your interview with the OR after bankruptcy, explain that your parents would like to buy the caravan.
Do they take away children’s games consoles?
No, they belong to your children, not you.
My brother’s jet skis are in my garage
This isn’t a problem – they don’t belong to you, so they are not at risk. You don’t need to list them on your bankruptcy application. No-one will come and inspect your house and contents.
Of course this does assume that your credit card statement doesn’t show that you bought two jet skis last year. If it does, you are going to have to explain where they are…
Will the OR take my husband’s car which I drive?
Your marriage vows may have said “for richer, for poorer”, but to the Official Receiver, you are two separate people with their own incomes, debts and possessions. So what matters is not who drives the car, but who owns it.
If you are going bankrupt and he isn’t, any things which belong to him are irrelevant. If you are the registered keeper of the car, then the OR will start off assuming that the car belongs to you. But being the registered keeper is not the same as being the owner – if you can produce proof that your husband bought the car then it will not be at risk.
My car is worth more than £4,000
A car that is worth less than £4,000 isn’t a problem in bankruptcy if it is essential for you. If you can show the OR that you need the car, for example to get to work, take the children to school etc, then the OR will agree that you can keep it.
When you are valuing a car to put on your bankruptcy application, use Parker’s guide. And unless it’s pretty new, use “poor condition”.
If your car is worth more than £4,000, then your options are:
- to have it sold and be given money, about £3,250 to buy a replacement, or
- for someone to buy it from the OR and let you continue to drive it, see the question about caravans above. If the car is worth say £5,000 someone would only have to pay £1,000 to buy it as you would have been allowed to keep a car that was worth £4,000.
If my car is included in bankruptcy can I sell it to a friend to keep it
Yes, see the question about caravans above. It’s best to wait until after you have gone bankrupt to do this.
If the OR doesn’t agree that you need a car then your friend can still buy it for the full price. However you have to be careful here because if the OR doesn’t accept that you need one, then you won’t be able to include car costs (road tax, insurance, petrol etc) in your expenses.
You can still pay for these things – the OR doesn’t check up what you spend money on – but if you have an IPA set, then you may not have enough money left to be able to afford them.
Will I lose a motability car?
No, you don’t own this car, it’s just leased so it isn’t an asset of yours.
The OR will have no interest in it. Don’t list it on your bankruptcy application.
What about my wedding ring and engagement ring?
The OR does not want your wedding ring unless it is very unusual and very expensive.
Engagement rings… well it does depend a bit on how much it is worth. But second-hand jewellery is often worth a lot less than you think…
You are not expected to list your engagement ring on your bankruptcy application form. You won’t be asked by the OR why it isn’t there or how much it is worth.
If I’m bankrupt do they take my shares?
Yes, you should expect to lose all financial assets such as savings, shares and bonds. You need to list these shares as assets.
Publicly traded shares will be sold by the OR. If you have shares in a private company, it can be difficult to value these. Talk to Business Debtline about this problem. If the holding is significant and you think they are valuable, it might be better to look at an IVA instead.
Can they find out that I have premium bonds?
Yes, very easily, your name is on the National Savings & Investments database, which belongs to the government!
This is a very foolish thing to try to conceal, list them on your bankruptcy application. Or sell them and use the money to pay your bankruptcy fees!
Don’t give things away
If you have read this article and are still worried the OR will take something of yours, you can’t get round this problem by giving it away. The bankruptcy application has a section where you are asked if you have given away or sold things for less than their value.
Those jet skis that you bought last year… you can’t say they aren’t yours because you gave them to your brother as a present.
If you give away or sell things to relatives or friends for less than they are worth before you go bankrupt, the OR has wide powers to demand that they are returned and you may also be facing a Bankruptcy Restrictions Order.
Bankruptcy – the big Qs (house, job etc)
Bankruptcy Qs – can the OR make me… ?
A Guide to Bankruptcy – what really happens
Monica says
Ok don’t know if this thread is still live – Although, I was overpaid by a council by 9k. Instead of taking payment plans they opted to employ a solicitors firm to make me bankrupt…who then became the trustees, and then went on to become the solicitors that represent the trustees aka themselves ….. is this legit??
Sara (Debt Camel) says
You can go to your local Citizens Advice for help – this would be free. Or you can get help from a solicitor specialising in insolvency.
Monica says
Thank you for responding- CAB don’t have the legal know how to deal with this and I have some solicitors who are attempting to help me with my housing, as the solicitors who started this all are attempting to sell our home …. so currently all available money is going to solicitors that specialise in housing.
Is it acceptable legal practice for solicitors to force a bankruptcy then directly benefit from making an individual bankrupt?
These solicitors had a charge on my home, refused all payment plan offers, and did not acknowledge my monthly payments of £175 I was making at the time of being made bankrupt…. Is it legal to operate in this way?
Sara (Debt Camel) says
A local CAB debt adviser can get help from the national specialist debt advice team.
I cannot comment on what is acceptable legal practice.
Christian says
So i’ve just submitted my application.
I have no assets except a shared ownership property – 30% – Bought for £92,000 2 years ago with around £78,000 mortgage left to pay.
Wife is 50-50 owner with me so I assume my equity in the property is something like £7-8000.
How likely is it that i’m losing my home? I know there is no definitive answer to this but would really appreciate some kind of inclination
Sara (Debt Camel) says
Have you take advice on going bankrupt from a debt adviser? How large are your debts? how much do you think your property is worth now?
Christian says
Yes i’ve taken advice – I wasn’t eligble for an IVA unfortunately. Debts are sitting at around £80k
Thank you so much – Its a nervy time and having someone with a bit of experience is very calming!
Property is worth maybe £100k now (Our 30%)
Sara (Debt Camel) says
So I hope the adviser explained that that your share of the equity becomes the property of the trustee. From there the trustee has 3 years to deal with your share. The Trustee can:
1) Sell your share. Your partner will be asked if they can purchase this based on the valuation and the potential costs of sale. the bankrupt’s share. If they do this, the share is transferred back to them. If they can’t afford to do this could another member of your family do this?
2) Apply to the court for an order for possession and sale of the property. The trustee will normally wait for at least a year before making this application. (
3) Place a charge on the property if the trustee cannot apply to the court for an order for possession and sale – this is unusual and you cannot choose to have this option.
If none of these things happen, the property will automatically be transferred back to you after 3 years.
I will say that it is not easy to value or sell a shared ownership property. I do not know if this means the trustee would be prepared to accept a lowish offer from your partner.
Also the current housing market is difficult – what it will be like in 2 years no-one knows.
Christian says
1) I think this may be a possibility but how would this work with mortgages? My partner probably doesn’t earn enough to be a sole mortgage holder? Or would I remain on the mortgage and the existing equity in the property would become hers?
I’m hoping that they will allow us to keep our home as it is all we jointly have.
Any advice from here on? I’ve read all your articles but I feel like I have an unquenchable thirst for knowledge on this matter lol
What kind of things are likely to be flagged up by the OR during the interviewing process? Anything I need to be aware of?!
Thank you for your help – you are an angel :)
Sara (Debt Camel) says
A sale of your share of the equity doesn’t affect the mortgage. Your name will remain on the mortgage.
I’m hoping that they will allow us to keep our home as it is all we jointly have.
I am afraid that is not relevant to the decision about selling the house.
As it is the family home, the timescale for dealing with this is 3 years, not one year.
The trustee would prefer not to sell the property if your partner can purchase your share – could either of your parents or other relatives help with this.
You may find it useful to post on the MSE Forum’s Bankruptcy Board: https://forums.moneysavingexpert.com/categories/bankruptcy-living-with-it. there you may get some responses from people who are currently going through it and I know some debt advisers sometime reply there.
Jon says
Hi. I wonder if someone could answer the following question?
I have received a letter from HMRC stating that they are about to make me bankrupt.
I own very few possessions and live in a small housing association studio flat.
In the summer, before I knew about the impending bankruptcy, I entered a four-year HP agreement to purchase a large wardrobe for my flat. This was a necessary purchase as I had nowhere to store my clothes and other belongings. The wardrobe cost around £1000 and I have made four payments on it so far.
When I am made bankrupt, I’m assuming that the HP agreement will be terminated. If that is the case, will the furniture company be able to demand the return of the wardrobe?
I would be most grateful if someone could advise me on this.
Thank you,
Jon
Sara (Debt Camel) says
How large are the monthly payments?
Can you tell me about the rest of your situation – how much do you owe HMRC? What other debts do you have? Are you self employed and had major business problems? How old are you ?
Jon says
Thank you for replying, Sara.
My monthly payment for the wardrobe is around £30. Like I say, it’s payable over four years.
I owe HMRC around £60,000. All tax.
I have few other debts. There’s £750 on Paypal Credit. That’s about it.
I am no longer self-employed. But the tax debt was run up when I was a self-employed journalist.
I am 61 years old. My only income now is from a weekend job. I also get some housing benefit as my income is so low. I live in a small housing association flat and have few possessions – no car etc.
Many thanks,
Jon
Sara (Debt Camel) says
Do you have money in a pension?
Also are you sure the wardrobe is on HP? Who is the lender?
Jon says
Hi Sara.
I have no money in a pension. No savings at all.
The wardrobe financing is through credit broker V12 Retail Finance Limited (parent company: Secure Trust Bank PLC).
Many thanks,
Jon
Sara (Debt Camel) says
Have you actually looked at the V12 paperwork? Does it actually say Hire Purchase?
Jon Wilde says
Hi Sara.
I have looked at the original contract.
It appears that it is a credit loan arrangement with monthly repayments.
When I go bankrupt (which seems inevitable), I would imagine that the loan agreement is nullified. But I am still left with the question: would the credit company (V12) look to reclaim the wardrobe I took the loan out on?
Again, any help with this would be greatly appreciated.
All best wishes,
Jon
Sara (Debt Camel) says
If it doesn’t say Hire Purchase, it is just a normal loan. This is not secured on the wardrobe and V12 cannot repossess it if you stop paying.
I think you should talk to Business Debtline https://www.businessdebtline.org/ about your situation. Nothing you have said suggests that bankruptcy is not a good idea but it is ALWAYS good to talk to a debt adviser about this.
Also you need to consider what you should do if HMRC ado not make you bankrupt. For example Business Debtline may suggest that you should stop paying the loan and PayPal in order to save up the bankruptcy fees.
Jon says
Thanks Sara.
I appreciate all your help.
All best wishes,
Jon
Chloe says
My partner is paying a loan for our car and V5 docs are in my name. He is paying the loan in full still and is in his name. Can I transfer ownership to him and would the car be classed as his?
Sara (Debt Camel) says
Is this car on finance or was this a bank loan? Was there a deposit on the car and who paid that?
Chloe Moss says
It was a bank loan in his name, no deposit
Sara (Debt Camel) says
So the money went into his bank account and was used to pay for the car?
Chloe says
The money was paid directly to him, he transferred to a joint account we hold where the car was paid for.
Sara (Debt Camel) says
Then you could argue that the car is not yours, it is his and it is just registered in your name because you are the main driver. He can produce the paper trail from his bank accounts showing where the money came from.
Talk to National Debtline on 0808 808 4000 about his issue and bankruptcy and whether you have any other options.
Harvey says
Hi Sara,
I am considering applying for bankruptcy as I am unemployed due to long-term illness and my only income at the moment is PIP which is around £411 per month. I am also in the process of applying for Universal Credit but I am not sure what I will get from this as I am renting from my ex-wife and I don’t know if they will accept my housing costs as being liable.
My total debt is mostly from credit cards, around £37K stupidly accumulated over the years.
I have a question about my assets: although I have nothing of value in my house, I have hundreds of books (nothing of value or collectible either, just plain normal books bought on Amazon) so will the books be treated as separated assets or will they be treated as ONE asset, i.e. one lot of hundreds of books that put together could have a value well above £500 and therefore do I risk having all my books taken?
If the latter, would an IVA or DMP be a better option for me?
Thank you for your help,
Harvey
Sara (Debt Camel) says
What do you think the second hand value of the books is?
If there are any that are £5+ have you thought about selling them to raise the money for the bankruptcy fee?
An IVA or a DMP would be a miserable experience for many years – and the IVA may fail.