Putting a charge on a property

[iwaswunderin]

I was declared bankrupt in April 2005 and since then my wife's parents and her uncle have been paying my mortgage. My name is the only one on the deeds. Can my parents-in-law put a charge on the property now for the mortgage payments (�22,000) they have made as the official receiver may ask me to sell the property as there is now about �30.000 equity . At the time of my bankruptcy the Equity was less than �10,000

[NORMANTHEDOG]

i would think they could,but you would have to consult a solicitor.

[themas]

I don't understand why they have been paying without sorting this out. It would have been better to have taken advice at the outset about the implications of doing this. Even if they can put a charge on (& I'm not sure whether they can) it would probably rank behind the OR's interest.

When you went bankrupt you lost the right to your house - that right vested in the OR - & his interest normally outranks any others. The only argument you might be able to make is that - if your relatives had not paid the mortgage - the house would have had to be sold at the outset of the bankruptcy (because you could not afford to pay the mortgage yourself) when the equity would have been much lower, so the amount the OR should take would be what the equity was at that time. You - or an Insolvency Practitioner acting for you - would have to negotiate this with the OR.

The OR should have explained to you at the outset that your interest in the house could be bought out by a third party. If this had been pursued then your relatives could have bought it out (assuming they had the money to do so) at that time. They could still buy it out now (to avoid you being evicted) but - as stated above - the amount would have to be negotiated.

I assume your wife lives with you. Even though she is not a legal owner of the house she could well have a beneficial interest in it (for example if she contributed at all to the deposit or mortgage, or she could build up one by living there with you and looking after the family - if you have children). If this is the case, the OR could not take any part of the equity which represented her beneficial interest. It is only YOUR interest that the OR has.

Incidentally, the OR only has 3 years from your bankruptcy to take action on the house so something will happen quite soon.