Will I lose my council house if go bankrupt
- 15 Mar 2022
Your council house or housing association property will not be affected if you go bankrupt. You do not have to worry about being evicted. The council are actually very unlikely to find out.
Included in this article:
- How is your council house affected if you go bankrupt?
- What happens if you owe rent arrears?
- Can you buy your council house after going bankrupt?
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How is your council house affected if you go bankrupt?
If you are renting a council house – or housing association property – you have no need to worry if you go bankrupt. You will not lose your home. You will be able to continue living in the property as normal.
In fact, 9 times out of 10, the council will not even be told about your circumstances. However, even if they do find out (which would be very unlikely unless you tell them), they are not concerned whether you are bankrupt or not. As as long as you continue paying your rent as normal, there will be absolutely no problem.
You can even move to a different council or housing association property while you are bankrupt. Although your credit rating will be poor, this is not a deciding factor when awarding you a new property or not. If you are on the list for social housing, you don’t need to be worried that going bankrupt will reduce your chances of getting a property. It won’t.
After the date you go bankrupt, you must continue paying your rent as it falls due. If you don’t, you will be personally liable for the debt and may be evicted.
What happens if you owe rent arrears to the council?
Rent arrears are included in bankruptcy. This means that any arrears you owe to the council or housing association are written off on the day you go bankrupt.
In these circumstances, they will of course be informed that you are bankrupt. This has to happen so they stop chasing you for the arrears. In addition, any overpayments you are making to cover arrears are stopped. However, even then, the council will not evict you. They are likely to tell you that they will have no problem as long as you pay your normal rent payments going forward.
When council rent arrears are included in your bankruptcy, you must make sure pay your ongoing rent on time from now on. If you don’t you could be at risk of eviction.
Your rent will be treated as one of your priority debts by the official receiver. You will be allowed to included a sufficient amount in your living expenses budget to pay it in full each month.
Remember, bankruptcy is an individual debt solution and only protects you. If your tenancy agreement is in joint names, the other named tenant remains liable for any rent arrears.
Can you buy your council house after going Bankrupt?
You may be in a position to buy your council house under the right to buy scheme (or something similar). If this is the case, going bankrupt will not prevent you from doing this.
However, you need to understand that it will not normally be possible to purchase your property for 6 years from the date you went bankrupt. This is nothing to do with the rules of bankruptcy. It is to do with your credit rating.
You will only be able to get a right to buy mortgage when the record of bankruptcy has been taken off your credit file. This happens 6 years from the start date. There is no way to speed up this process. You can start to improve your credit rating after you are discharged. But mortgage lenders will not consider you for right to buy until the record is no longer showing.
This means you will have to wait 6 years from the start date of your bankruptcy before you can think about buying your council house.
Renting your property from the council or housing association? Bankruptcy could be an ideal debt solution for you. Give us a call (0800 044 3194) or complete the form below for free, confidential advice.
I was declared bankrupt on the 11th of April i had rent arrears and this morning I received a court summons for my arrears its on Tuesday the 14th of June what do I do
Hi Caroline
I assume you are living in a council property? If so, all your rent arrears were included and written off by your bankruptcy. The council would then have to suspend any collection action. Generally speaking they would not try to evict you unless you fail to pay your rent from now on.
Are the Council aware that you have gone bankrupt? Did you include your rent arrears as a debt on your application? If not, they probably don’t know. In these circumstances you need to speak to the official receiver straight away and inform them. They will be able to write to the court and get the action stopped.
You should also contact the council yourself and tell them about the bankruptcy. The action against you should then be stopped.
Remember, you are responsible for paying your rent from the date you went bankrupt. If you don’t keep up with this, the council can restart their action against you.