Q MY WIFE and I bought a private house about nine years ago.
I was declared a bankrupt about three years ago because I was a guarantor for loans in my previous company amounting to more than $1 million.
We are still living in the house as my wife is still servicing the mortgage, which is currently less than $30,000.
I think the reason that the Official Assignee (OA) has not required me to sell the house is that the market value of the house is much less than the Central Provident Fund savings we have used to buy the house.
I will be turning 55 in five years' time and do not see myself being discharged from bankruptcy.
Will the OA force me to sell my house when I reach 55?
If I am forced to sell, will the proceeds go back to my CPF account or will they be used to settle with my creditors?
Is it wise for my wife to buy my share of my house now as she has the means?
A The OA will not force you to sell your house when you reach 55.
Only your mortgagee bank can foreclose on your house if you default on your housing loan.
Your CPF monies are protected from all other creditors under section 24 of the CPF Act.
For foreclosure by your mortgagee bank, your CPF monies are protected as your housing loan was taken before Sept 1, 2002.
Prior to this date, the first charge on all private property mortgages was the CPF Board.
However, if you have re-financed your housing loan after this date, the first charge will have been changed to the mortgagee bank.
If this is the case, your CPF monies plus accrued interest utilised for the property will not be protected from the mortgagee bank, but will be protected from all other creditors.
If at the time of foreclosure, your spouse is below age 55, her CPF savings used for the mortgage and accrued interest will be returned to her CPF account if your loan was taken before Sept 1, 2002.
Since Sept 1, 2002, banks have the first charge on private property, and since Jan 1, 2003, banks also have the first charge on HDB bank loans.
If your wife buys your share of the house, your CPF monies used for the mortgage and accrued interest will be returned to your CPF account.
However, any surplus amount will form part of your assets, which will be subject to the OA's consideration with regard to your bankruptcy and subsequent discharge.
Leong Sze Hian
President
Society of Financial Service Professionals
Advice provided in this column is not meant as a substitute for comprehensive professional advice. E-mail questions to chanteik@sph.com.sg
