How does my partner’s bankruptcy affect me?

3. Decide what will happen to your home

Your is where you and your spouse live together during your marriage. Usually, each spouse owns half of the home’s . The equity of the home is the value of the property less any mortgage or debt you still owe.

You and your spouse might own different amounts of the home’s value. For example, you might have paid a larger share of the cost and you and your partner have agreed that you will have 75% of the equity, and they will have 25%. This information would be included in your property title.

If your partner owns part of the home and is bankrupt, you might be able to keep your home if you can buy your partner’s share. If you can’t do that, your trustee will help you to sell your home.

Example

If the title to your home says that you and your partner each own half a home worth $200,000:

House value

$200,000

Mortgage

$100,000

Total equity (house value – mortgage)

$100,000 ($200,000 – $100,000)

Your partner’s equity (total equity ÷ 2)

$50,000 ($100,000 ÷ 2)

If your partner is bankrupt and you want to keep the house, you will need $50,000 to buy your spouse’s share of the equity. Or your home can be sold and the $50,000 that is your partner’s share of the equity will be used to repay your partner’s .

Your trustee will help you understand how much equity you have, and what you need to do to pay back your creditors.

If you sell your house, you will get your share of the equity. Any costs related to selling the house will be taken out of the equity before it is paid to you. For example:

Your equity

$50,000

Cost to sell house

$2,000

You get

$48,000

If the equity in your home is less than $10,000, you might not have to sell. Talk to your mortgage company to make sure they will still accept payments from you to continue the mortgage.

If the home is in your name only then your spouse does not have a share of the equity. You will be able to keep the home even if your spouse goes bankrupt. It does not matter if the property is your matrimonial home or not.

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