Enterprise Act 2002

Section 261: Bankrupt's Home

761. Section 261 makes provision in relation to the sole or principal residence of the bankrupt, the bankrupt’s spouse or the former spouse of a bankrupt, and where the bankrupt has an interest that is comprised in the bankrupt’s estate. The section (subsection (1)) inserts section 283A into the Insolvency Act 1986. This new section provides that where a bankrupt’s estate comprises an interest in such a residence, that interest reverts back to the bankrupt unless within the three year period following the date of the bankruptcy the trustee:

(a)

realises the interest;

(b)

applies for an order of sale or possession in respect of the premises in which the interest subsists;

(c)

applies for a charging order over the premises in respect of the value of the interest; or

(d)

enters into an agreement with the bankrupt regarding the interest.

762. The section (subsection (3)) also inserts a new section 313A into the Insolvency Act 1986 which provides for the dismissal of applications for orders for sale, possession or a charging order in respect of the bankrupt’s residence where the value of the bankrupt’s interest is below a level prescribed in secondary legislation.