Spouse of bankrupt individuals must buy share of property to secure family homeFriday 06 September 2013 21.59
The State-appointed official in charge of the country's new insolvency regime has said 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.
Chris Lehane, who will be in charge of the Insolvency Service of Ireland, was speaking to RTÉ News before the regime begins accepting applications next week.
Mr Lehane said: "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."
In a case where there was equity of €20,000 in the family home, he said he would approach the spouse and seek to have them buy half of it from him to allow them to "continue to stay in the family home".
He added: "If that is not possible I have to go to the court to sell the family home."
Mr Lehane said: "So there are situations where there is large equity and the spouse can't afford it where I will be selling family homes.
"Where there is negative equity in the family home it is a little more difficult. There is no equity for me to realise."
Mr Lehane added that it was "not necessarily true" that a person would lose their family home as a result of being bankrupt and "it just depends on each individual circumstance".
He said most of the family homes coming into bankruptcy will be in negative equity. While the individuals will be discharged from bankruptcy in three years, the half share of the home will continue to vest in the official assignee.
He said following an extensive period of negative equity he could, in some cases, accept a sum of €5,000 plus his legal costs to sell the half of the home to a spouse.
He said that would be the minimum that he would accept.