Overview Of Repossession Of A Bankrupt’s Home
In order for the Trustee in Bankruptcy to arrange repossession of a Bankrupt’s home there are a number of matters that will need to be dealt with.
Repossession is the means by which a Bankrupt’s home can be realised for the benefit of creditors when it is contested and the property cannot be dealt with by way of agreement.
The interests of the Bankrupt’s creditors are said to outweigh other considerations 12 months after the date of the Bankruptcy Order in light of Section 336(5) of the Insolvency Act 1986:
Where such an application is made after the end of the period of one year beginning with the first vesting under Chapter IV of this Part of the bankrupt’s estate in a trustee, the court shall assume, unless the circumstances of the case are exceptional, that the interests of the bankrupt’s creditors outweigh all other considerations.
Section 283A Notice
It is a requirement that a notice under Section 283A of the Insolvency Act 1986 is served on any party that has an interest (or could have an interest) in a Bankrupt’s main property where he or she resides.
The purpose of the notice is to inform any such interested party of the Trustee in Bankruptcy’s interest in the property.
If the Trustee in Bankruptcy does not take steps to deal with the property within 3 years of the Bankruptcy Order then it will return to the ownership of the Bankrupt automatically.
This notice must be provided to such parties in light of Rule 10.167 of the Insolvency (England and Wales) Rules 2016:
10.167.—(1) Where it appears to a trustee that section 283A(1)(1) applies, the trustee must deliver notice as soon as reasonably practicable to—
(b)the bankrupt’s spouse or civil partner (in a case falling within section 283A(1)(b)); and
(c)the former spouse or former civil partner of the bankrupt (in a case falling within section 283A(1)(c)).
(2) Such a notice must contain—
(a) the name of the bankrupt;
(b) the address of the dwelling-house;
(c) if the dwelling-house is registered land, the title number; and
(d) the date by which the trustee must have delivered the notice.
(3) A trustee must not deliver such a notice any later than 14 days before the third anniversary of the bankruptcy order or, 14 days before the third anniversary of when the official receiver or trustee became aware of the property.
Court Application For Repossession Of A Bankrupt’s Home
When a Bankrupt’s property cannot be dealt with by the Trustee in Bankruptcy by agreement, he or she will typically then need to issue a Court application for possession and sale to enable repossession of a Bankrupt’s home for the benefit of creditors.
A witness statement will need to support such an application so that the Court has the necessary information and evidence available to it so that it can properly consider the matter.
The key pieces of information that will usually be required are:
- The details of Bankruptcy.
- Details of the property, its value and any outstanding mortgages or secured charges.
- The level of creditors of the Bankrupt.
- The costs of Bankruptcy.
- Details of any attempts to avoid the need for the application for repossession of the Bankrupt’s home.
Template Statement Supporting Repossession Application
Below is a typical template of the sort of matters that one might find covered in a statement that could be used to support the application by a Trustee in Bankruptcy to enable repossession of a Bankrupt’s home for the benefit of creditors:
I, [TRUSTEE IN BANKRUPTCY] of [FIRM AND ADDRESS], [OCCUPATION], will say as follows:
1. I am the Applicant in this matter and I am the Trustee in Bankruptcy of [BANKRUPT], the Respondent.
2. The matters set out in this witness statement are true and within my own knowledge except where indicated otherwise. Where I rely on information which is not within my own knowledge, I have explained the basis and the source of that information and believe it to be true.
3. There is now produced and shown to me a bundle of documents consisting of true copies of the documents I will refer to in this witness statement marked as Exhibits “[xxx]” to “[xxx]”. Where I refer to exhibits in this witness statement, I am referring to those exhibits, and where I refer to page numbers, I am referring to the page numbers within those exhibits.
4. I make this witness statement in support of my application for:
1) A declaration that the [freehold] property known as and situated at [ADDRESS] and registered at HM Land Registry under title number [TITLE NUMBER] (“the Property”) is owned by the Respondent, and that pursuant to the Court’s bankruptcy order dated [BANKRUPTCY ORDER DATE], the Respondent’s beneficial interest in the Property has vested in the Applicant;
2) An order that the Property be sold with vacant possession and that the Respondents do each concur in such sale.
3) An order for sale of the Property pursuant to Section 14 of the Trusts of Land and Appointment of Trustees Act 1996 and Section 335A of Insolvency Act 1986.
4) An order that the conduct of the sale of the Property be given to the Applicant or his solicitor.
5) An order that the Respondents should each join in with the Applicant and do all such things as may be necessary to procure the sale of the Property with vacant possession.
6) An order that the Respondents should each deliver up vacant possession of the Property to the Applicant within 14 days of this order.
7) An order that the proceeds of sale, after deduction of all necessary expenses of sale and such sums as are required to redeem the charge on the Property, be paid to the Applicant.
8) An order that the Applicant’s costs be an expense of the bankruptcy estate.
9) Any other order that the Court thinks fit.
5. The Respondent was adjudged bankrupt on [DATE OF BANKRUPTCY ORDER], following a petition presented to the Court on [PETITION DATE]. A copy of the bankruptcy order appears at Exhibit “[XXX]”.
6. I was appointed to act as the Trustee in Bankruptcy of the Respondent’s bankruptcy estate on [APPOINTMENT OF TRUSTEE DATE]. A copy of my Certificate of Appointment appears at Exhibit “[XXX]”.
7. By virtue of section 306 of Insolvency Act 1986, the Respondent’s beneficial interest in the Property immediately vested in me upon my taking the appointment as his Trustee in Bankruptcy.
8. Official Copies of the Registered Title of the Property appear at Exhibit “[XXX]”, which confirms the Property was purchased by the Respondent on [XXX];
9. I attach at Exhibit “[XXX]” and “[XXX]” copies of the Official Receiver’s handover notes and Initial Information Sheet respectively. These documents show that the Bankrupt confirmed to the Official Receiver that at the time of the bankruptcy order, the Respondent held an interest in the Property.
10. I attach at Exhibit “[XXX]” a copy of a valuation carried out by [VALUER NAME AND ADDRESS] on [DATE]. The valuation carried out estimates that the property is worth in the region of £[AMOUNT] and states that they would recommend initially marketing the property at £[AMOUNT] in order to gauge interest. A copy of the valuation report is attached as Exhibit “[XXX]”.
11. The property is subject to a legal charge registered in favour of [NAME OF MORTGAGE COMPANY OR CHARGEHOLDER] (“the Mortgagee”) of [ADDRESS]. The Insolvency Service Initial Information Sheet referred to above and attached at Exhibit “[XXX]” refers to the outstanding balance of the mortgage as at [DATE] was £[AMOUNT].
14. To the best of my knowledge, information and belief, I am not aware of any other creditors who are entitled to claim any charge or security over the property.
15. Exhibit “[XXX]” confirms at page [XXX] that as at [DATE], the bankruptcy estate had nine unsecured creditors with an estimated total value of £[AMOUNT].
16. In light of the information set out in paragraphs above, I can confirm that for the purposes of s.313A of the Insolvency Act 1986, the value of the Respondent’s interest in the property is not below £1,000.
Occupants Of The Property
17. To the best of my knowledge, information and belief, the only person who is occupation of the property other than the Respondent is [NAMES].
Correspondence With The Respondent
18. On [DATE] I sent to the Respondent and other potentially interest parties a notice pursuant to s.283A Insolvency Act 1986 and Rule 10.167 Insolvency Rules 2016 stating that the Property vests in me as Trustee in Bankruptcy for the Respondent. A copy of the notices are attached at Exhibit “[XXX]” being pages[XXX].
19. I attach at Exhibit “[XXX]”, being pages [XXX], copies of correspondence between my office, my solicitors and the Respondent in respect of the property and my interest in it.
20. As the Court will see, the Respondent has been unable to either purchase my beneficial interest in the Property or arrange for another interested party to arrange the same. In the circumstances, and in particular my ongoing obligations to the creditors of the Respondent, I have little alternative other than to make this application to perform my statutory duty to the creditors to realise the Property for their benefit. My beneficial interest in the Property is due to re-vest in the Respondent on [DATE – THIRD BANKRUPTCY ORDER ANNIVERSARY], which could prejudice the interests of the creditors of the Respondent’s bankruptcy estate.
21. I have been left with no option but to make this application to protect the interest of the creditors of the Respondent’s bankruptcy estate.
Estimated Outcome For Creditors
26. The outstanding value of the mortgage as at [DATE was £[AMOUNT].
27. The open market value of the Property appears to be in the region of £[AMOUNT]. On this basis that the Property was to sell for this sum, I believe that the Respondent’s interest, which has vested in me pursuant to s.306 of Insolvency Act 1986, is £[AMOUNT].
28. I estimate that the costs and expenses to realise my interest in the Property, from the date of this witness statement, should the Court grant the order requested, will be approximately £[AMOUNT] plus VAT.
29. I believe that it is just and reasonable for the Court to make the order in the terms sought, for the benefit of the creditors and I would ask that the Court make such order.