Your home is your castle and contrary to popular belief, an insolvency practitioner can satisfy his duties as a Trustee and save your client’s castle. Numerous individuals discuss with me the impact of Bankruptcy on both their ability to live in their home and to invest in their future wealth position. I am convinced the right strategy implemented by the Trustee can put you or your client in a position where they can remain in their castle and even pay off their mortgage without later forfeiting the asset to the Trustee.
Such a strategy avoids the heart wrenching, costly and difficult task of removing an individual from their home.
If your client can raise funds within the relevant timeframe that would be greater than the surplus from the sale of the property to the open market, then the range of different vehicles used to provide your client with security in their home include:-
- Deed of Transfer – Transfer to a related party.
- Deed of Forebearance – Trustee agrees not to sell the property now and within the relevant timeframe for acceptable consideration.
A successful deed will not only bring a better return to creditors but also peace of mind to a bankrupt in addition to avoiding unnecessary relocation costs and taxes.
A blog on saving a home wouldn’t be complete without a warning regarding antecedent transactions (ie transferring a property to a third party like wife or son for under value). Should individuals enter into dubious transactions prior to going bankrupt a Trustee will investigate and likely void those transactions in effect removing any sense of security or future entitlement to you or your client’s home.