From 1 January 2011 the Insolvency Service has put the following changes into effect:

The Official Receiver (OR), as trustee of the bankruptcy estate, will no longer dispose of a bankrupt’s interest in a family home until two years and three months after the bankruptcy order is made, except if an offer is received which is in the creditors’ interests to accept.

At two years and three months a review will begin. In cases where the bankrupt’s interest in the property is valued at less than £1,000, steps will be taken to revest the property interest in the bankrupt.

Otherwise, if there is insufficient equity to attract an insolvency practitioner to act as the trustee of a bankruptcy estate, enquiries will be made as to whether the bankrupt or a third party would be interested in purchasing the interest, assuming the property interest may be worth more than £1,000. If it is not possible to transfer the interest, and the interest is valued in excess of £1,000, the OR will consider applying for a charging order.

If there is sufficient equity in the property, and if the OR is not aware of any willing purchaser, a Secretary of State appointment of an Insolvency Practitioner trustee may also be sought.

The OR has the discretion to effect an early revesting of the property back to the bankrupt in specific circumstances.

With cases in the Mortgage Rescue Scheme reliant on the prompt response of the OR and the effect of bankruptcy orders delaying the rescue, the continued dialogue with the OR is crucial to enable a smooth rescue.