Move House while Bankrupt
- 28 Oct 2021
There is no legal reason why you cannot move house while you are Bankrupt. However there are some restrictions which need to taken into account.
- Can you move house while you are bankrupt?
- Moving to a new rented property
- Buying a property if you are bankrupt
- Should you wait until after you are discharged?
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Can you Move House while you are Bankrupt?
There may be a number of reasons why you need to move house while you are bankrupt. You may have got a new job which is a long way from your current address. Alternatively your family circumstances might have changed.
What ever the reason legally speaking you can move if you wish. You are even allowed to move abroad. There is no problem with you moving as long as you update the Official Receiver with your new address so they can contact you if necessary.
Having said that your options for moving will be limited because of the effects that Bankruptcy has on your credit rating and your surplus income.
If you live in Northern Ireland you can only move abroad after first getting permission from the Court.
Moving to a new Rented Property if you are Bankrupt
The main issue regarding moving to a rented property while you are bankrupt is your poor credit rating. This will often hold you back from finding a new property through a letting agent.
Most agents will carry out a credit check against you which you will fail. Generally speaking the only way around this is to either offer to pay rent in advance or get someone to act as a guarantor on your behalf.
The other potential problem is the cost of the rent. It will be difficult for you to afford an increase in rent particuarly if you have an Income Payment Agreement. Where this is the case the Official Receiver might agree to reduce your IPA. However this will only be the case if the move is absolutely necessary.
If you are moving to a Council or Housing Association property your credit rating will not affect you. These organisations will not consider this when deciding whether to provide you houseing or not.
Buying a Property if you are Bankrupt
If you are currently a home owner your share of any equity in your property belongs to the Official Receiver (OR). As such if released after a sale it will not be available to use as a deposit on a new home.
On top of this your poor credit rating will prevent you buying a property. It will be impossible to get a mortgage while you are Bankrupt.
Your options for getting a mortgage will start to improve after you are discharged. However it is unlikely that you will be able to do so for at least 3 years from the start date of your Bankruptcy.
If you own a property and you simply have to move home you could sell and then go into rented accommodation. The OR may allow you to keep a small amount of any equity released to put towards the cost of moving.
Should you wait to Move Home until after you are Discharged?
The issues you face with moving will become easier if you can wait until after you are discharged. The record that you were bankrupt will still remain on your credit file. As such your credit rating will not improve immediately. However there are things you can do to start this process.
If you are looking to move to a new rented home you can then say that you are no longer a bankrupt person which should help. However if you are looking to get a mortgage you will almost certainly have to wait 2-3 years to allow improvements in your credit rating to take affect.
BE Tip: If you are not currently on the housing ladder but are keen to buy a property the best advice is always resolve your debt problems first. If you go Bankrupt this will often mean your debt is written off after 12 months. You will then find it easier to save for a deposit and make your mortgage payments when you do eventually get one.