Keeping your home in bankruptcy - the proof!

There is a common myth about bankruptcy that you nearly always end up losing your home. This deters people from taking what might be their best course of action.

However, it’s not true – and our recent client success story proves it.

Keeping your home in bankruptcy is possible – if you get expert professional guidance.

Here’s how we helped one husband and wife team keep their house even when the husband was made bankrupt.

How Kate kept the family home…

A lady (let’s call her Kate) recently called us to assist with buying her bankrupt husband’s half interest in their jointly owned family home, from his bankruptcy trustees.

She was unsure how to do this herself and wanted help putting an appropriate offer to the trustees. Of course, Kate didn’t want to pay too much; but she didn’t want the trustees to force the sale of the property to the open market either.

Early discussions indicated that the property had up to $150,000 equity (value less mortgage). Kate could raise $50,000 at the absolute most but legal fees and stamp duty costs would eat some of that up if a sale did proceed.

Prior to making an offer to the bankruptcy trustees, we obtained and reviewed documents from Kate. These showed that both loans secured over the property were solely in her bankrupt husband’s name.

Saved by ‘equity of exoneration’

As discussed in this article on the equity of exoneration by our Pearce & Heers colleagues, Kate’s situation gives rise to a potential adjustment of the co-owners’ interests.

Upon closer review, we identified that Kate was entitled to rely upon the equity of exoneration as both loans over the property had been taken out by her husband for his investments in property and shares – both of which had gone bad.

We believed she was therefore entitled to receive all of the equity in the property – including her bankrupt husband’s share.

We calculated and documented Kate’s equity of exoneration claim clearly to her husband’s bankruptcy trustees. The trustees were very amenable to the case we made, promptly reviewing and accepting Kate’s claim and agreeing that the bankrupt estate had no interest in the property.



 Total $Bankrupt Estate $Kate $
Property Value600,000300,000300,000

Adjusted for the equity of exoneration claim:

 Total $ Bankrupt Estate $ Kate $
Property Value 600,000300,000300,000
Mortgage: Allocated to husband first, balance to wife 450,000 300,000 150,000
Adjusted Equity 150,000 Nil150,000

Kate’s understandably pretty chuffed with this result and so are we!

It’s a great demonstration of how to keep your home in bankruptcy – and is another one to add to the case for bankruptcy as a way to ease financial stress – without giving up what you value most.

Kate’s decision to call us saved her $50,000 AND, more importantly, avoided her home being sold in bankruptcy.

At Cactus Consulting we love achieving results like this. We are constantly looking for ways to achieve the best outcomes possible for clients.

If you’re wondering how to manage your own situation, call us on 1300 906 966 or start chatting via the live chat window on our site.

Posted on 08-03-18 in Bankruptcy Assistance, Money management and bankruptcy.