The spouse of a bankrupt individual may need to buy their partner’s share of the family home in order to remain in the property, it was explained yesterday. Chris Lehane, the State-appointed official in charge of the Insolvency Service of Ireland, was speaking to RTÉ news ahead of the new service which will start taking applications next week.
Mr Lehane, the official assignee of bankruptcy, is the court-appointed official whose role is to assist bankrupts in their obligations to their creditors. The body has already had over 4,500 inquiries and its boss, Lorcan O’Connor, expects thousands of people to avail of its services.
“When a person is made bankrupt the joint tenancy, to use the classic situation where a man is married and he has a spouse, is split and as official assignee, half the house vests in me,” said Mr Lehane. He said most of the family homes coming into bankruptcy will be in negative equity and that while individuals will be discharged from bankruptcy in three years, the half share of the home will continue to vest in the official assignee.
Mr Lehane explained that in a case where there was equity of €20,000 in the family home, he would ask the spouse to buy half of the equity from him to allow them to remain in their family home. He said that if that were not possible, he would go to the court to sell the family home, particularly in cases where there is a large equity that the spouse cannot afford.
“Where there is negative equity in the family home it is a little more difficult. There is no equity for me to realise,” he said. He added that following an extensive period of negative equity he could, in certain cases, accept a sum of €5,000 plus his legal costs to sell the half of the home to a spouse but that would be the minimum amount he would accept.
He said if a person is made bankrupt they may not necessarily lose their family home.