Bankruptcy and your home
For homeowners, the house is usually the biggest question in bankruptcy. Whether it is at risk turns on equity — here is how that works.
Applies to: England & Wales
What to do now
- Get a realistic valuation and your mortgage redemption figure.
- Keep paying your mortgage or rent.
- Talk to a free adviser before applying if you own a home — free debt advice.
It starts with equity
Equity is what would be left if the home were sold and the mortgage and any secured loans repaid. If you own jointly, your share is part of that. GOV.UK sets the line at £1,000: above it, the trustee can sell the property or apply for a charging order, which secures the trustee’s share so it is paid when the home is sold later.
If you are the sole owner
Ownership and any equity pass to the trustee and a bankruptcy restriction is added at HM Land Registry, so you cannot sell the home yourself.
If you own it jointly
Your share passes to the trustee, but the other owner keeps theirs. A restriction is added to the Land Registry entry so the trustee is told about any dealings. If the property is entirely your partner’s, they can apply to remove it.
Ways a sale may be avoided or delayed
- Buying out your share. A partner, relative or friend can offer to buy the trustee’s interest, usually at market value less costs.
- Time to arrange housing. A sale can be delayed for up to a year if you need to arrange somewhere for children or a partner to live.
- The three-year rule. If the trustee has not started dealing with your home within three years, it usually transfers back to you.
Your mortgage
A mortgage is a secured debt and is not written off by bankruptcy. Keep paying it if you stay in the home. Missing payments can lead the lender to take possession action, separate from the bankruptcy. Mortgage arrears.
If you rent
Your landlord might be told you are bankrupt. GOV.UK says it is unlikely you will be asked to move out if your rent is up to date. Rent arrears from before the bankruptcy can be included, but keep paying current rent.
Weighing it up
Homeowners with equity they want to keep often compare bankruptcy with an IVA, where under the 2025 Protocol the home is excluded and equity affects the length rather than ownership, or with a DMP, which does not touch the home at all. Each has its own costs and risks; a free adviser can compare them using your figures.
This page explains how the solution works. It is not a recommendation, and it cannot tell you whether it suits you — a free, regulated debt adviser can look at your full situation.
You never have to pay for debt advice. MoneyHelper (government-backed), StepChange, National Debtline and Citizens Advice all give free, confidential advice with no obligation.
Common questions
Will I lose my house if I go bankrupt?
Possibly. If there is equity above £1,000 after secured debts, the trustee can sell or get a charging order, though a partner or relative may be able to buy your share instead.
What is the three-year rule in bankruptcy?
If the trustee has not started dealing with your home within three years, it usually transfers back to you.
Do I still pay my mortgage if I am bankrupt?
Yes. A mortgage is secured and is not written off, so keep paying it if you want to stay in the home.