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Bankruptcy and secured loans – what are the rules?

my mother is going to be made bankrupt in 2 months and she owes £99k on a mortgage and £45k on a secured loan. The property is worth £150k. Can I buy the property off her when she is bankrupt? but I only want to buy the mortgage debt and not the secured loan …

Once she has gone bankrupt, control of the property will be vested in the Official Receiver and it will be the OR which decides what can and can’t be done. Regarding the question about taking over the mortgage but not the secured loan, the answer is No. If you were to buy the property, you would need to raise a new mortgage that cleared both of these. Should you decide to do the transaction before she goes bankrupt, ensure a fair market related price is paid or you could end up in a ‘Transaction at Undervalue’ boxing match with the OR. You don’t want that to happen.

 

 

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