Will my Partner be affected if I go Bankrupt

How is your Partner affected if you 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.

Given you and your partner are living at the same address it is possible that information from your file could be mistakenly mixed up with their’s. It is important they check this by getting a copy of their credit file.

If any of your information does appear they can ask to be disassociated from it. This will then overcome any subsequent credit problems.

Your partner’s credit rating is only at risk if you have joint debts which they cannot pay. Any missed payments will also be recorded on their credit file. This will negatively affect their credit rating.

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

  1. Mark Jenkin says:

    I am thinking of applying for bankruptcy. If in the future I move in with a partner and share the cost of their mortgage and bills, will this be seen as beneficial interest whilst I am on my IPA ?

    1. Hi Mark,

      If you move in to your partner’s property after you go bankrupt then you have abslutely nothing to worry about. You bankruptcy is only concerned with interest you might have in a property by the date you go bankrupt. Remember bankruptcy only lasts 12 months. As such if you subsequently move to your partner’s place and start sharing the mortgage and bills you will not have time to build up any interest in the property by the time you are discharged.

  2. Paul says:

    Hi, Going Bankrupt seems to be the only serious option I have, giving me the chance to get on top of things once and for all, feel like I can breath again, take the stress and worry away from my family and allow me to start again and move on with life. I have not done it yet as I am worried about the effects on my wife’s standing and her salary. We rent our home and my salary covers all of our living expenses; – Rent, Utility Bills etc- all in my name. My wife’s salary covers the costs involved with our vehicles; – HP on her car, our daughters car and my car- all in her name. Between us we then pay for our day to day living costs such as food etc. Currently we have very little disposable income. My concern is whether the OR will have issues in the way we pay our bills currently and what effect going bankrupt will have on my wife? I must admit, whilst I appreciate bankruptcy seems to be the only sensible option it scares me to death! Thank you in advance for any help and advice.

    1. Hi Paul,

      Rest assured the OR is not interested in the mechanics of who pays what. They are simply interested to understand whether your overall household living expenses are reasonable and what if any disposable income you have. They will calculate this by considering the total household income and total houshold living expenses. If after the total expenses are deducted from the total income there is a surplus they will split this between you and your wife pro rata based on the contribution to the total income you both make. You would only ever have to pay your share towards your debts.

      If you would like further advice or help or assistance with the bankruptcy process please do not hesitate to contact me at Beat My Debt (Tel: 0800 077 6180).

  3. Danielle says:

    Hello, my partner went bankrupt a few years ago and at the time we needed to set up an account for him when his closed as he gets paid weekly. But because the closed his new account he couldn’t open another one straight away so I opened another account in my name and it is a joint one that he uses. Now I’m worried that I won’t be aloud credit. My clear score is on good ground but I see that on my report that both bank accounts are linked to this. Will the bankruptcy show up against me because we have a joint account?

    1. Hi Danielle

      The record of your partner’s bankruptcy should never show on your credit file. However if you have a bank account in joint names particularly if it has a credit facility such as an overdraft your partner may then be listed on your credit file as a “Financial Associate”. If this is the case when you apply for credit and give the lender permission to check your credit report they can also look at information on your Partner’s credit file. In theory this could negatively affect your application.

      As such the first thing I would do is check your credit file and find out if your partner is listed as an Associate. If they are my suggestion would be that you that your partner opens a new bank account in his name only and uses this from now on. You can then take his name off your account. After you have done this you will need to contact the main credit reference agencies (Equifax, Call Credit and Credit Fix) and tell them that the association with your paertner no longer applies and ask them to remove it.

      Note: If your partner went bankrupt less than 6 years ago his credit rating will still be poor. As such he will need to apply for a basic account. Many banks offer these accounts. They are free and come with a debit card and internet banking. You can fnd out more about this here: Can I have a Bank Account if I go Bankrupt.

  4. Clare says:

    Hi there,

    I am coming to the end of my year of bankruptcy. My partner and I have been on benefits and my wage has been less than £200 per month so I was told by the OR no need to declare unless it reaches that amount. If my partner begins to earn and we come off benefits will I have to make payments out of my share of tax credits and my wage of around £70 a month?

    1. Hi Clare

      If you are bankrupt you only ever have to make payments towards your debts if you personally have a surplus income. Given your income is made up of tax credits and your wage is only £70/mth I think there is very little chance of this as the OR has already established. As such you are not required to make any ongoing payments towards your debts. This situation could only change if your personal income increases. As the OR has told you there is no need to speak to them unless your income personally rises above £200 a month.

      If your partners income increases this is nothing to do with your income. As such you do not have to tell the OR about it.

  5. Charlie says:

    Hi Sir

    I have £30000 unsecured debt. I am a self employed receiving working tax credit. The house is on my wife’S name but she doesn’t work. My question is what will happen to house if I go bankrupt?

    Thanks in advance

    1. Hi Charlie

      Whether or not your wife’s house will be affected if you go Bankrupt will depend on whether you have any financial interest in it. Even though it is in her name the Official Receiver can argue you have an interest in it if you helped pay the original deposit, paid for any significant home improvements (such as a conservatory) or have paid the mortgage on her behalf for any length of time.

      In these circumstances the OR is likely to argue that a percentage of any equity in the property is yours. This amount would therefore have to be raised and paid to them if you go bankrupt.

      If you have done non of these things and the deposit and and all mortgage payments have always been paid for by her from her income it is unlikely you have built up any financial interest. In that situation the house would be safe.

      This can be a complex area. As such before making the decision to go bankrupt I would strongly recommend that you get further advice about the property. Please contact me at Beat My Debt (0800 077 6180) if you would like to chat the situation through.

  6. Heather says:

    I’ve just found out that i’m pregnant with my 3rd child. this wasn’t planned, I can’t afford a 3rd child but really don’t want to get an abortion, I don’t believe in them. To have a baby me and my husband could not afford to pay all our loans, credit cards and bills. If I stay at work I can’t afford childcare and if I come out of work I can’t afford our debt. I already went bankrupt and was discharged in 2010…..can I go bankrupt a 2nd time…could we do this as a couple

    1. Hi Heather

      From what you have said I feel that bankruptcy may well be a sensible way for you and your husband to deal with your debts. Assuming that neither of you are home owners and you do not own a car worth more than £1000 you would have nothing to lose. If you will not be working you would not have to make any further payments towards your debts and you would be discharged after 1 year.

      The fact that you went bankrupt previously does not matter. You can certainly go bankrupt for a 2nd time. It was almost 10 years ago and your situation now is unrelated to what happened before so you would not be penalised. In fact you will not even have to declare that you went bankrupt previously on your application form.

      In terms of both of you going bankrupt there is no such thing as a joint bankruptcy. You would need to make separate applications. The downside of this is that you would both have to pay the fee. For this reason you need to consider the total debt in each of your names. If either of you (or both of you) owes less than £20k then that person might qualify for a Debt Relief Order. This would give you the same outcome as bankruptcy but is far cheaper to implement.

  7. Keith says:

    Hi I am looking into bankrupcy, I however I am living with my wife in her house which she owns. I pay half the bills for the last year and 7 month what would happen to her house if I was to go bankrupt?

    1. Hi Keith

      If the property is in your wife’s name and she paid for the deposit then if you have only been contributing to the bills for 18 months I do not think there will be any risk. I do not think the OR could argue that you have any beneficial interest. However this can be a complex area so if you would like to chat it through please do give us a call (0800 077 6180)

  8. Nicola says:

    Hi
    I was made bankrupt in January 2018, I am looking into marrying my partner and we will live in a rented house. Could you please let me know how this could affect the bankruptcy, ie. Would it affect his wages or the monthly payments which I repay.
    Many thanks

    1. Hi Nicola

      This is a very good question. I assume you are not living with your partner at the moment? If you get married he will not become liable for paying your debt in any way. However if you move in together (whether you get married or not) you will have to notify the Official Receiver. They will then need to review your new household income and expenses budget.

      To do this the OR will need information about your partner / husband’s income and all the household living expenses. They use this to work out the household surplus income. This is then split between you and your partner. Your partner will be allowed to keep their share. Your share has to be paid to the OR. If this is higher or lower than the amount your are currently paying your IPA will be changed accordingly.

  9. Patrick says:

    I was declared bankrupt on 2nd August 2018. I’ve yet to do an IPA as i’ve changed jobs and the OR is going to send them through any day now so its accurate with what my expenditure is. The question i’ve got is apparently I have to do a joint expenditure with my wife. She has around £600 a month to pay off in loans. Can i take this off the amount I declare as her take home pay, or is there an option to add this on as an expense when submitting the IPA? I’m worried she’ll be out of pocket if they don’t allow for this and they expect for her to pay this out of her left over disposable money after expenses which will mean we both have no money!

    1. Hi Patrick

      This is a very good question and is very important to understand (ideally before making the decision to go bankrupt).

      When you complete your income and expenses budget for the Official Receiver (OR) you must declare all income of the household. This includes the total amount of income your wife receives (there is a section on the IPOQ form you will be asked to complete for you to identify this). You also include all the household expenses including housekeeping for the both of you and any expenses she has for things like running her car and any pension or health insurance she pays. However (and this is very important) you cannot include her debt payments in this expenses budget.

      Once the income and expenses budget is complete the OR will use this info to calculate the household disposable income. However they will then split this figure between you. The split is pro rata based on the level of contribution to the household income you both make. In other words if your contribution to the income is 60% of the total and your wife’s in 40% then 60% of the disposable income is deemed yours and 40% your wife’s. The OR can then only request you pay your 60% towards your debts.

      Your wife is allowed to keep her share of the disposable income to do whatever she likes with. Of course if she has her own debts to pay she can use her share to maintain those payments. The only time this becomes an issue is if her share of the disposable income is not sufficient to maintain her debt payments. In that situation she will have to start a debt management solution of her own. You are not allowed to give her any of your share of the disposable income to help her pay her debts.

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