"Giving the right advice, first time, every time"


The right result for creditors and debtors


1 June 2016: A Trustee in Bankruptcy has three years to deal with a debtor’s interest in their property and, if not dealt with in that time, the interest in the property will return to the debtor.  The only way to stop the time running and protect the Trustee’s interest is to issue proceedings for possession and sale of the property within three years.  However, this is always viewed as a drastic and expensive last resort. 

BRI have been dealing with the bankruptcy of a husband and wife for the last two years, in which the main asset was the family home with equity totalling some £47,000.  At the time of the Trustee’s appointment, the three year anniversary of the bankruptcies was just 5 months away.  This meant that if the Trustee didn’t act fast, the interest in the property would not be realisable for the benefit of creditors.

The importance of engaging with the debtors at the earliest opportunity was quickly identified.  An open and honest approach was adopted by the Trustee, who explained from the outset that an appropriate agreement needed to reached to avoid possession proceedings. 

The debtors, with two small children, indicated that they did not want to lose their home and were keen to explore alternative options.  We were able to agree a settlement of £40,000 for the equity in the property, payable in monthly instalments over two years.  The agreement was made on the basis that an Order for possession and sale would still be obtained, but with a provision that it be suspended and only enforced in the event that the promised payments were not made.  The Order was made with consent of the debtors, thereby avoiding considerable litigation costs being incurred.  The Consent Order was obtained shortly before the third year anniversary of the bankruptcies.

The debtors have recently made the final payment due under the agreement, meaning that creditors can look forward to a modest return, whilst the debtors have been able to stay in their home.  BRI worked to produce the right result for the creditors and for the debtor.

If this is an issue relevant to either you or your clients, please contact our management team who can assist with exploring viable alternatives which are in the best interests of all parties.