I have recently come across an enquiry from a lady whose partner was seeking to go bankrupt. He has a property which he doesn’t live in, as he lives with her. It is rented out at present. She wanted to know what would happen to the rental income on that property if he became bankrupt.
That set me thinking, as there must be many people in the same or similar situation now that we have so many people getting together later with their own assets.
The answer is straightforward but does not make good reading for the individual involved.
Where, at the date of the bankruptcy order, the bankrupt is living in rented accommodation but is also renting out a property in which he/she has a beneficial interest, the bankrupt’s share of the profit from the rental income (rental income less allowable deductions such as insurance and obtaining a gas safety certificate) is an asset that vests in the official receiver upon his appointment as trustee.
Where the official receiver is trustee, the bankrupt’s share of the profits from the rental income should be claimed as an asset and should not be included in any IPA/IPO calculation
Before taking steps to collect rent the official receiver needs to consider:
(a) The nature of the occupation of the property by the lessee or tenant;
(b) Whether the insolvent’s interest in the property is likely to result in any equity for the benefit of the estate;
(c) The extent of the landlord’s obligations under the lease or tenancy e.g. for insurance of the property or repairs to it; and
(d) Whether the property is subject to a mortgage.
The official receiver should collect the rent even if the party occupying the property was occupying it without the knowledge of the mortgagee, but the official receiver must be certain that collection of rent will not give rise to a tenancy that did not otherwise exist. The official receiver should not be prevented from collecting the rent purely because the insolvent had used rent collected to pay the mortgagee prior to the insolvency order. If a mortgagee later enters into possession of the property or appoints a receiver, the mortgagee will be entitled to all unpaid rent even if the official receiver has attempted to collect that rent. Any rent already collected by the official receiver should not be remitted to the mortgagee but should be retained by the official receiver for distribution in the prescribed order of payment, the rent being treated as part of the insolvency estate.
Contact Steve Thatcher of Help With Debt (UK) Limited a total debt solutions company. If you have any debt problem whatsover either personal or corporate make Steve your first call all advice is free. Finally if in the UK and you need a friend to speak to call 01162171406 Visit http://www.helpwithdebtuk.com Article Source:http://www.articlesbase.com/finance-articles/how-your-unlived-in-property-can-be-dealt-with-in-bankruptcy-1729078.html
For all further reading see http://www.helpwithdebtuk.com
For personal contact email sthatcher@helpwithdebtuk.com
Mail this post
Posted under Finance
This post was written by MoMoney on January 15, 2010
