Can they hold an interest in my house for more than 3 years?

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Firstly you are correct that the Trustee in Bankruptcy has 3 years to deal with your home, if this is not dealt with in the 3 years from the date of your bankruptcy this will automatically vest back in your name.

In order for the Trustee to retain an interest in the property he will need to obtain a Court order to register a charge on the property in accordance with Section 313 of the Insolvency Act. Owing to the property being in negative equity your beneficial interest in the property is less than the prescribed £1,000 (the amount laid down in Insolvency Rules for dealing with the home) as such the Court will not make an order of sale, possession or grant a charge against the property in favour of the Trustee in Bankruptcy.

I therefore do not know on what basis your Trustee can retain an interest in the property. It may be best to write to your Trustee to ask on what basis in accordance with the Insolvency Act and Rules that he will be able to retain an interest in the property as the property is in negative equity.

Please note that between now and June 2011 property prices may increase thus increasing the equity in the property, the Trustee can apply at any time in the 3 year period but there has to be at least £1,000 equity in property before a Court Order will be granted.

Hope that this helps

I am in a similar situation. Is it that a charging order application needs to have been made, or that it has to reach court and the charging order to have been made. I read everywhere about an application within three years, but not if there has to have been a hearing within 3 years with an order being made.

Just to labour the point and be clear. Is it sufficient for a charging order application to be made within the 3 year limit, but for the order to be received after the 3 year limit?