Losing a business to insolvency is bad enough – losing the home you worked equally hard for is something else. This is why many business owners end up worried about the implications of their business entering insolvency and whether or not they will be personally liable.
Unfortunately for sole traders, this will almost certainly be the case. The process of insolvency for an individual can end in bankruptcy where a trustee of the estate is appointed to calculate the value of assets belonging to the bankrupt individual.
With the house being the most valuable asset, most people own, this is where the trustee is likely to start because their interest will be in satisfying creditor demands. How much the trustee can take from your share of the property will depend on a number of factors including whether or not your spouse owns a 50% share.
They will be able to remain in the property for 12 months or more to ensure their family members have time to prepare for possession and sale of the property.
This could at least buy time to gain help from family and friends and even your spouse who may be able to settle the value of the trustee’s interest. The house could even be re-mortgaged to release equity to pay off the sum owed.
If you find yourself in this or a similar position and insolvency practitioner may be able to help.