House Repossession

[panhandle]

I have read that if a house is jointly owned, husband & wife, and only one of the owners has unsecured debts that cannot be paid, e.g. due to ill health/redundancy etc, then the house can be repossessed in order to pay off the debt's. Is this true as it seems rather harsh on the non-debtor?

[Loosehead]

The house cannot be reposessed for unsecured debts, however a charge can be placed on it so that when it is sold the debts are paid.

[panhandle]

Thanks Loosehead. However, the article went on to say that if the debtor were to be made bankrupt by his creditors then the house could be repossessed. Would you know if that part is true?

[Didwot]

Continuing Looseheads answer, a judgment creditor can apply to the court for a charge to be placed on the debtor's interest in the property under the Charging Orders Act 1979. If the debt is not paid within a reasonaable time the judgment creditor can apply to the court for an order for the house to be sold. It is in the Court's discretion as to whether such order is made.
Entirely separatley if someone is made bankrupt then all of their assets (with limited exceptions) vest in thier Trustee in Bankruptcy. These assets include the debtor's share in the house. The Trustee in Bankruptcy can apply to the court for an order that the house be sold under s336 of the Insolvency Act 1986, and if the application is made more than a year after the bankruptcy then the order is almost always granted. The co-owner can, and should, try to agree terms whereby they buy up the bankrupt's interest in the house from theTrustee, and thereby avoid a sale of the property.

[Miss Zippy]

Yes that is true. In a nutshell, when someone is made bankrupt they must attend their local Official Receiver who will investigate the extent of your assets and debts.  If a bankrupt person has any assets and/or savings etc, then these are vested in an external trustee and it is his or her job to realise those assets in order to pay off the creditors. If a bankrupt owns a property jointly with another (non bankrupt) person, then that person must take immediate legal advice to establish a claim against the trustee - i.e. try and preserve any right they have to the property, whether this means preventing a sale of the property or ensuring that person receives a share of the proceeds that is rightfully owed to them. Partners of bankrupts often assume that any rights they have to the jointly owned property will be automatically protected, but this isn't the case.