Will my Partner be affected if I go Bankrupt

Will my Partner be affected if I go Bankrupt

Your Partner is not responsible for your debts if you go bankrupt. However they may be affected in other ways.

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Does your Partner have to pay your Debt if you go Bankrupt?

Your partner is not liable to pay your debts even if you go bankrupt. A third party cannot be forced to pay debt that you cannot or will not repay. This is the case even if you are married.

Nevertheless you will have to provide information about your partner’s income. This is so the Official Receiver (OR) can make sure sure they are paying a fair share of the household expenses.

The OR will take this into account when considering how much of your income should go towards the expenses and how much you can afford to pay towards your debts.

If you have joint debts your partner remains liable for the full balance of these. If they cannot afford the payments from their income they may also need to consider a debt solution.

Will your Partner’s Credit Rating be affected if you go Bankrupt?

When you go bankrupt your credit rating is negatively affected. However this does not happen to your partner or anyone else who lives with you. The record of your bankruptcy does not appear on their credit file.

This means they are still free to take out new forms of credit in their name. They will pass lender’s credit checks as long as they have no debt problems of their own.

There is a small possibility that information from your file could be mistakenly mixed up with their’s. If they suspect there is a problem they should check their credit file.

Your partner should still be able to get credit while you are bankrupt. Their credit rating is only at risk if you have joint debts which they cannot pay.

How will a jointly owned Property be affected?

If you own a property in joint names your share of any equity will be transferred to the OR. However your partner’s share does not have to be handed over. It is not at risk and remains their’s at all times.

Your share of any equity will have to be released. One option is for your partner to raise the funds required. They may have savings of their own or you might choose to re-mortgage the property to achieve this.

If there is considerable equity and you or your partner simply cannot release it the OR might issue a charge for the value of your share. In extreme cases they can force the sale of the property.

If the property is force sold your partner’s share of any equity released will always be given to them. They can spend this money on whatever they like. However they are unlikely to be able to stop the sale.

Can you keep a Joint Bank Account if you go Bankrupt?

After you go bankrupt any account you have been using will normally be frozen by the bank. The OR can take control of any money in it over and above what you need for reasonable living expenses.

If you have any joint accounts the best way of protecting these is to take your name off before you go bankrupt. This should be a simple process if the account is in credit.

If your joint account is overdraw this debt will be included in your bankruptcy. However because it is in joint names with your partner they will still be liable to repay the overdraft in full.

You are allowed to have a bank account in your own name once you are bankrupt. Normally it is best to open a new account before going through the process. There are a number of basic accounts that you can choose from.

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68 thoughts on “Will my Partner be affected if I go Bankrupt

  1. Mollie says:

    My husband has been made bankrupt. He has been a user on our son’s credit card ( he had his own card) my husband hasn’t used this card for the last 6 months. Should my son cancel his Dads user card? Will this affect me son in any way?

    1. Hi Mollie

      The first thing to confirm is that the debt your husband has built up on your son’s card is not included in his bankruptcy. Your son remains liable for this debt.

      In terms of your son cancelling his Dad’s card this is really between them. Legally speaking your son can continue letting his father use the facility if he wants. As a bankrupt person his Father is not allowed to take additional credit. However if his son wants to give him money this is between them.

      However if your son prefers this card not to be used any more then I suggest it is cancelled.

  2. Amy says:

    I have only been married for four months and my husband is going bankrupt. I have a mortgage out in my sole name will this affect me?

    1. Hi Amy

      Given you have only been married for 4 months you should have nothing to worry about. The official receiver will not consider your husband has any interest in your property on the basis of your marital status.

      There would only be an issue if prior to you getting married he has paid for any material improvement to the property (eg paid for a conservatory) or he has contributed directly to the mortgage payments.

  3. lewis says:

    i am considering declaring bankruptcy and have been living with my partner for 18 years. she has had a mortgage in her name only for the last 3 yrs. my income has been the only income for the past 12 months. would the property be affected by me declaring bankruptcy?

    1. Hi Lewis

      This is potentially a problem. In theory because you are not married and the property is not in your name you have no financial interest in it. However given you have been maintaining the mortgage payments for the last 12 months I believe the official receiver will use this as an argument to say you have now developed an interest. They are likely to find out as they will ask about your partner’s income. When you say she has none they will know you must be paying the rent or mortgage…..

      Given this the property would be affected in so much as the OR would require you to release your interest in it. In real terms if there is little or no equity in the property your interest may not amount to very much. Where this is the case the whole thing may well be a very small issue and it might still might be worth considering bankruptcy. However I would certainly not proceed without speaking to an expert. I would be happy to have a chat with you about it if you like (0800 077 6180).

  4. Emma says:

    Hi,

    My husband has gone bankrupt for debts he had before we even met. the OR has asked him to disclose my income (I earn quite a lot more than he does). I have refused to disclose this as this is not my debt and my surplus income should not benefit the creditors in my view. He also has two children from a previous marriage which he rightly pays half for, which again i should not be given responsibility over. Thus far we have not disclosed household expenses either (e.g. my mortgage payments etc) as this is not his expense and we do not have joint accounts.

    The OR is quite adamant that this information should be shared as in their view if I earn more i should pay more (which I already do) the example he gave was if her income is 60% then her costs should be 60%. My income is about 80% higher than his and I do not agreed i should be responsible for 80% of expenses as that would cover costs which are rightly his (e.g. childcare).

    Do I legally have to disclose? I would consider divorce and living separately if need be.

    1. Hi Emma

      As discussed in the article above when you are married and living together the official receiver will always ask for a household income and expenditure budget. This should include both party’s income and all the living expenses. The reason they do this is it avoids the “he pays for this and I pay for that” confusion. It also take into account the idea that in a married unit normally the personal with a higher income would pay a higher percentage of the bills. A simple household disposable income can then be calculated which is split between both parties on a pro rata basis related to income. In other words if you contribute 70% of the household income then 70% of the disposable income is yours. He will be asked to pay his 30% into an income payment agreement.

      That said you are not legally obliged to give the official receiver your income information. At the end of the day you are not bankrupt. However your husband is legally required to co-operate with the OR. If he does not provide information as reasonably requested his discharge could be suspended which would be a big headache for him.

      Generally speaking I advise people to provide the household income information as required. After all you have absolutely nothing to lose by doing so. Your share of any surplus income is protected. However if you absolutely refuse to do this then your husband has a couple of options:

      First he could honestly tell the OR that he does not know what you earn and you will not tell him. However he will then provide information based on his best guess. This might be acceptable. Alternatively he could present himself as a lodger in your property. As such he would not have to disclose any financial info about you at all. However this will usually only be acceptable if you have only been together for a relatively short period and have no children together.

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