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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54 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.

  10. Stefano says:

    Hi, I am separated from my ex wife. She lives with her parents and left me with the house which is in major negative equity. She stopped paying the mortgage (it is a joint mortgage). I have been fighting for custody of our child which has left me with over 15.5k in debt. If I go bankrupt would this affect my contact order with my child? I have no way to pay the fees.

    1. Hi Stefano

      We are not solicitor’s here. As such I am unable to say whether going bankrupt would affect your contact order or not. I would guess that it would not but to be sure you will need to get advice from the solicitor who helped you with the contact order. Alternatively your local CAB (Citizens Advice) might be able to help.

      In terms of the property are you able to afford the mortgage? If not and it is repossessed then bankruptcy would certainly help. Both the £15k of debt you own now AND any shortfall on the mortgage after it is sold would be included and written off.

      Remember if you go bankrupt it will protect you from any mortgage shortfall. However it will not protect your ex wife. She would still be liable to pay this debt.

  11. Mary says:

    Hello,

    My ex partner declared bankruptcy in 2015. we have a joint property which he has continued to pay but not lived in the property for the last 8 years. The house needs extensive renovations and is worth £80000 with a mortgage of £73,000. He has continued to pay the mortgage and myself make a minimal payment.

    I asked that the house be sold in June, my ex partner has a buyer for the property. However, he has continued to look for a mortgage, which he was unable to get due to his bankruptcy. I agreed alongside the insolvency company to sell the house. But now he is telling me the official receiver will not sell the house now. Their is not a huge amount of profit and 50 Percent will go to the official receiver.

    My ex partner is now saying he is just going to give the bank the keys to the house, he’s said the bank has said they will close the mortgage with nothing to pay if I give consent for the house to be signed over to them, which I can’t believe is true as surly this will start the repossession process, which I do not want to happen. I have an appointment with the bank this week.

    I have applied to court for a Forse of sale, but rather than going down this route I would prefer to sell the house. The official receiver told my expartner they will not sell the property unless the £8000 owed to them is paid, which he can’t afford. I would have thought the official receiver would rather sell the property take his share of around £3000 towards what he owes. I am going to speak to the insolvency agency tomorrow to confirm what he is saying is right. I can’t afford the mortgage or a solicitor, as I’m a single parent and on a low income, so this is an extremely difficult time. I need much needed advice

    1. Hi Mary

      From what you have said I am not 100% clear on your situation. I think I understand correctly that you live in this property but your ex does not? I understand the joint equity is about £7000 (if the house sells at £80k with an outstanding mortgage of £73k). Given it is joint £3500 of this equity would be yours and £3500 would be your ex’s. As he is bankrupt his share would go to the OR.

      I am not a conveyancing solicitor. However as far as I am aware the only way the house can be sold without a court order is if both you and your ex give your consent and sign the necessary forms. If you are both in agreement that the house should be sold and he does not live there I cannot understand why he would not agree. If you both consent then I do not believe that his Official Receiver would block the sale. It would simply not be in their interest.

      Because the house is jointly owned the mortgage lender cannot repossess as long as the mortgage is being paid. As such as long as one of you continues to pay the mortgage no repossession can happen. If you are living there and continue to pay there should not be any risk. I do not believe the OR would force the sale given the amount of equity is so low. As such they may decide to simply put a charge on the property for his share of the current equity and leave it at that.

      **Important** If neither of you pay the mortgage then the bank will repossess. They will then likely sell the house in an auction and it is highly likely that they will get less than the market value. If this happens it is very likely there will be a shortfall. You will both be jointly liable for this. Make no mistake the bank will NEVER agree that you have nothing to pay if you give consent for the repossession. If there is a shortfall after the sale it is 100% certain that they will chase you for that debt. Unfortunately for you your husband would be protected by his bankruptcy. As such the mortgage lender will only be able to chase you. They would demand that you paid 100% of any shortfall.

  12. CStar75 says:

    My husband was made bankrupt today due to an overdrawn directors loan account on a liquidated company. We spent thousands on legal fees defending the case as the figures owing were disputed (and evidence provided) but he still lost and now the costs are even higher!

    We jointly own a house with equity and this is the only asset we have. It has been suggested to annul the bankruptcy but not sure how, other than selling the house to pay it off, as we now can’t raise what’s owing any other way. Is it too late now to do this? Can I offer an IVA route instead or will the OR force a sale that they control and pay me what’s left from the equity?

    Also my husband is sole director of a Ltd company, will he have to stop trading therefore losing his income?

    1. Hi CStar75. There are a number of points to cover here:

      1. Your husband cannot be a director for the year he is bankrupt. The law says he must resign. It is possible to keep the limited company running by appointing someone else to be the director (perhaps yourself). Your husband can then continue to work for the company but as an employee until he is discharged.

      2. The house you owe in joint names is at risk. The Official Receiver or Trustee (if one is appointed which is likely) will be obliged to realise his share of the equity in the property to help pay this debts. If he is unable to do this any other way then ultimately the Trustee can apply to the court to force the sale of the property. Generally speaking the court would support this application.

      3. If you want you can sell the property. If by doing this you can raise sufficient funds to pay back what your husband owes in full it might be possible to annul the bankruptcy. However you will also have to pay the Trustees fees which are likely to add a further £20k-£30k to the total debt. It would likely be better to sell and simply hand your husband’s share of the equity to the Trustee and then have done with it. After 12 months he will be discharged and can be a director again and you keep your share of the property equity.

      4. It would not be possible to apply for an IVA and then annul the bankruptcy unless the IVA offer gives at least as much to the creditors as they are likely to get in Bankruptcy. If the only way to do this would be to sell your house anyway then there is really very little point in considering this option.

  13. Karen Taylor says:

    I am in full time employment as is my husband – I had debts from my previous marriage and have also accrued debts from this one – £30 k approx – I am in a DMP but see no end as it will take 8 years plus to pay off.

    I have looked into Bankruptcy but fear that if I do declare they may say that I need to stick with the DMP. It is causing me a lot of stress and my marriage is suffering because of this. We are in rented accommodation.

    Do you think it is possible for me to declare myself bankrupt- Thankyou

    1. Hi Karen

      I assume that you are worried someone will say you cannot go bankrupt as you are currently making payments towards your debts? This is not the case. You can certainly stop your DMP and then go bankrupt if you want. Your property will not be affected as it is rented and your husband will not be involved.

      Having said it is important to understand that you will have to give details of both you and your husband’s income on your application and your total household living expenses. The official receiver will then calculate your total household surplus income.

      If there is any your share will have to be paid towards your debts for 3 years. Your husband’s share would be his to keep.

  14. Kerry says:

    If my ex husband goes bankrupt will I be left with the full amount of any joint debts to pay off on my own?

    1. Hi Kerry

      Unfortunately the answer to this is yes. If your ex goes bankrupt and you have joint debts with him you will be personally liable to pay 100% of the balance of these. If you are unable to afford to pay them you may need to consider implementing a debt solution of your own.

  15. Helen says:

    I have debts of around £10,000 and haven’t been paying anything on them for about 12 months since my husband found out about the debt and that i had been spending bills money to meet the repayments. The debt stems from a time when i was a housewife and suffering from mental illness.

    I started self employed cleaning about 18 months ago to try and get my life back on track. I just work 14 to 16 hours a week while the children are at school so my earnings are quite low.

    I have a car but its in my husbands name and my money covers the petrol, running costs and food shopping. My husband pays everything else and the mortgage is in his name. We don’t have any joint finances. If i go bankrupt will it affect him? Will he be able to buy a house again? And can they take the car?

    1. Hi Helen

      Because you are married and your husband is a home owner Bankruptcy is not automatically a sensible solution for you. The fact you are married and have children means that even though your name is not on the mortgage in a Court of law you probably do have an interest in the property. As such it could be at risk if you use the bankruptcy solution.

      Given this I would strongly advise you consider an alternative solution such as a debt management plan or an IVA. If you can afford to pay £100/mth to cover all your debt an IVA would probably be best. You would have to pay for 5 years and then the remaining debt would be written off.

      Your husband would not be affected by an IVA. His credit rating would not be impacted and nor would the house or car.

  16. Ian says:

    I seem to have a bit of a grey area in my bankruptcy that the OR is also struggling to get me an answer. I took out my mortgage in june 2007 in my sole name as I was currently single so had the mortgage in my sole name. I married in Feb 2009 but never moved the mortgage to joint names

    Fast forward to now and I have gone bankrupt and stated on my application that my wife has a 50% interest in the house as she has paid towards the mortgage and upkeep since we married but is not named on the mortgage

    I cant seem to get an answer from the OR if they will consider her as 50% owner although not on the mortgage

    1. Hi Ian

      Unfortunately this is not a straight forward situation. It is understandable that you want the OR to recognise that your wife has an interest in your property to protect half of the equity. Given you bought the property before you were married and your wife is not on the deeds the starting position taken by the OR is that she has no interest. However I do not believe this is the case.

      In my opinion your wife certainly has a claim on some of the equity in the property. This is firstly based on the fact that you are married and have been so for more than 5 years. Given this in a divorce situation the Court will assume that she is entitled to a share of your assets. If you have children together her claim will be even stronger. The same rights should be considered in a situation where you become insolvent. As an aside the same rights would not exist if you were not married but just living together as partners.

      In addition if she has paid directly towards the mortgage or paid for specific improvements then a Trust will have developed meaning that she has developed an interest to the value of the funds she has put in.

      The question is always going to be how much of the equity can your wife reasonably claim. Unfortunately there is no rule book here. In divorce more often than not it would be down to the court to decide. However make no mistake she would be awarded something. I believe the Official Receiver must take this into account and therefore it would be wrong for them to state she has no interest.

      To try and get a better view of what the split might be (and of course depending on the amounts involved) you might want to discuss this with a family solicitor. I am pretty sure that the OR would accept that outcome as the way the split should be handled in your bankruptcy.

  17. John Scott says:

    Hi

    I am considering bankruptcy. My partner and I were equal shareholders in a LTD company. I have recently resigned from the company and have been taken off the joint account.

    But on the bankruptcy form it asks for details of all accounts I’ve had in the last 12 months. So I have to declare it.

    Will the account be frozen once I’m declared bankrupt? Even though I’m no longer on the account and no longer a director of the company?

    Thank

    1. Hi John

      You do not have to declare a limited company bank account on your application form. You only need to list accounts you have had personally in your name. The limited company account is not in your name. It is in the name of the limited company.

      That said you will have to declare that you were a director of this company in the last 12 months. Even though you have resigned as a director you still own 50% of the shares which are an asset. The official receiver will be interested to understand whether these shares have a value.

      If the business was simply a service company with no “sale value” there is little to be concerned about. However if there is value in the business (which would be listed in the company accounts) then the Official Receiver will need to realise this value by selling your shares.

      I would suggest you get more advice on this before submitting your application. Please contact us at Beat My Debt and we would be happy to help (0800 077 6180).

  18. Jess says:

    Hi,
    My husband has outstanding debts from 5 years ago, around 30,000 that is now catching up with him. We live in a house that was left in my mums wills, that I own with my brother and sister.
    If he went bankrupt would the house come into it and would it affect me ever getting a mortagage on this house?

    Thanks

    1. Hi Jess

      This is not straight forward. The question is does your husband have a financial interest in the property. On the face of it if he did not help you pay for it and there is no mortgage that he has contributed towards and he has not paid for any material improvements then he would have no interest. In that case if he goes bankrupt the property would not be at risk.

      However the issue is you are married. As such you need to consider the position if you were to separate and go through a divorce. If that were the case would your husband have any claim on the property? This may depend on how long you have been married and how long you have lived in the property together. If in a divorce he does have a claim on the property then that would also be pursued if he went bankrupt.

      We are not solicitors here. Before he decides to go bankrupt I strongly suggest you get advice from a family lawyer as to what his rights would be in the hypothetical scenario that you got divorced. If they say he would have no right to any of the house and can give you that commitment of that in writing then bankruptcy might be considered. However if there is any doubt at all I would strongly advise avoiding bankruptcy and using an IVA.

  19. Kerry says:

    I currently have around 30000 worth of debt. I’m married and have been for 2 years. I live with my husband and our 2 children. My husband owns our home, he went bankrupt in 2011 and the mortgage is now a interest only mortgage. My husband gave up work just under 2 years ago to care for our children as childcare is so expensive. I pay all the bills including the mortgage interest only payment.

    Our house is valued at 102,000 with around 99000 left on mortgage. If I was to go bankrupt do you think they would look at taking my husbands house? I understand fully that as I’m paying the mortgage that they could see that I have an interest in the house.

    1. Hi Kerry

      Given you are married and you have been paying the mortgage for the past 2 years I think the official receiver will conclude that you do have an interest in this property. I would think their starting point would be you have a 50% interest in any equity.

      That said if the value is £102k and the mortgage is £99k then the total equity is no more than £3000. In this situation the house itself is not at risk as long as you keep paying the mortgage (which you will be allowed to do as part of your reasonable living expenses). However you will need to buy back your interest from the OR. You interest is calculated as the value of your 50% share of the equity. In other words a third party will need to pay £1500 based on the current valuation.

      You do not have to do this immediately. However the longer you leave it the more likely it is you would have to pay more. If the value of that house prices go up your 50% share of the equity will be worth more. As such the amount required to buy back your interest will be that much higher.

  20. Kath says:

    Hi there, I am very seriously considering bankruptcy – as have around £24k of unsecured debt that has built up over the years and is now leaving me with very little disposable income. I have been married for 8 years but the house is in my husbands name, as he has owned the property for the last 18 years. Would the OR try and make a claim on the house, I did not pay any deposit to it and he pays the mortgage? This is the only thing that is stopping me really going bankrupt. Thanks

    1. Hi Kath

      This situation is complicated. On the face of it because you did not pay the deposit and have not paid the mortgage it would seem that you have no interest in your husband’s property. However the fact you are married means that you probably do have an interest.

      Before making any decision about bankruptcy I suggest you speak to a family lawyer. Ask them what claim you would have on the property if you were to get divorced (hypothetically of course). Insolvency Law normally follows family law in these matters. If a family lawyer thinks you would have a claim then the Official Receiver will probably think so too.

      In that case you might want to avoid bankruptcy and use a different solution – perhaps an IVA.

  21. Deborah says:

    I am 17 month into bankruptcy. I’ve got a boyfriend and were in talks about moving in together he has got a lot of savings would the bankruptcy (A.I.B) take his savings into account and need to pay it. The debt is in my name and my ex partners name due to us splitting up and he continued to live in the house and didn’t pay the mortgage. The mortgage company tracked me down 6 years later.

    1. Hi Deborah

      Given you mention the AiB I assume you are living in Scotland…. Whether in Scotland or England/Wales a third party is not responsible for your debts. If you move in with your boyfriend any savings or assets he owns are not at risk. He would not have to pay these to the AiB

  22. Louise says:

    Hi there,

    My husband is self employed , I don’t work I receive tax credits and child benefits which I greatly depend on for my two children . Between me and my husband we have Debts of just over 20k his debts are around £9000 and our joint debts are £5000 and my debts are around £6000 . He is massively under pressure to pay everything and he is feeling like this is the only route to go down.

    But I don’t want to go bankrupt as I feel like I would loose my tax credits bank accounts etc. The question is if he goes bankrupt alone how will this affect my tax credits bank accounts etc as I said I massively depend on these for my children also would this affect my husband’s self employed job?

    We have just recently moved into my parents home so don’t own our own home car etc.

    1. Hi Louise

      If your husband or indeed both of you go bankrupt you do not need to worry about your bank account. If only your husband goes bankrupt then your bank account will not be affected in any way (he can also have an account – see below). If you decide to go bankrupt as well to deal with your debts then you can also have a bank account. You will be able to use it to continue receiving your tax credits. You don’t need to worry about that.

      The type of bank account you can have when you are bankrupt is called a basic account. Most banks now offer these. If you owe money to your bank and/or if your account is a current account you will have to open a new basic one. It is easy to do because most banks now offer these.

      In terms of your husband’s job this would not be affected. If he goes bankrupt he can continue working as a self employed person with no problem.

      I note that individually your debts are less than £20,000. Given you have no assets I therefore suggest you both consider a Debt Relief Order (DRO) rather than bankruptcy. This gives the same outcome but if you qualify (which it sounds like you would) then the cost of the process is just £90 per person rather than £680 for bankruptcy. This option might be better for you both. The comments above re bank accounts and self employed work also apply for a DRO.

  23. Peter F says:

    Hi, a relative has asked me to look into PPI for his wife.
    He was declared bankrupt 16 years ago, she was not affected.
    He thinks he has/had no PPI and any claim would not be his anyway.
    If (big IF!) she is successful in her PPI claim:
    1. Would she be entitled to it, or would it go to OR?
    2. Could it in any way negatively affect them (i.e. could the OR enforce payment or take any retrospective or current action against him/her/both?)
    They are both very nervous about putting themselves in a negative situation as they have managed to get themselves into a good place in the last few years!
    Thanks in advance

    1. Hi Peter F

      If the wife of your relative had debts in her name that were not included in her husband’s Bankruptcy then she can claim for PPI against these. If she is awarded compensation it will be 100% hers to keep.

      If you are talking about joint debts which were included in the bankruptcy then again she could still claim. However of course only 50% of any compensation would be paid to her. The other 50% would have to go to the Official Receiver.

      If she gets a windfall like this (or any other windfall for example an inheritance payment) it will not negatively affect them in any way. The official Receiver has no right to, or claim upon, any windfalls that a non bankrupt receives whether they are married to a bankrupt person or not.

      By the way if he is now discharged and receives a windfall which is not a result of something that happened before he went bankrupt or while he was bankrupt it would also be his to keep.

  24. Mark says:

    Hi, my wife has her own company which I have nothing to do with and is on the brink of bankruptcy. I have my own job and we have no joint debts and we rent a house. What impact would my wife’s bankruptcy have on me financially? I have PCP agreements and a loan but having read some of your comments, would I be right in thinking I would most likely be worse off as a result because my income would need to be declared and the OR can have a slice of my wages leaving me less money to cover my own bills?

    1. Hi Mark

      If your wife goes bankrupt this should have no impact on you whatsoever. You can continue paying your car finance agreement and loan. Your credit rating will not be affected.

      The only thing to be aware of as you say is the income and expenses calculation. The OR will need to do a household income and expenses budget. This will need to include the total household income and expenses. The household surplus is then split based on the proportion of the income you both generate. This process ensures both parties are contributing their fair share towards the household living expenses.

      A problem can occur if the party who is going bankrupt has been subsidising the other’s debt payments. This is not allowed to carry on if they go bankrupt and can leave the non bankrupt party with debts they cannot afford. However in your situation this would seem unlikely. If your wife’s business is going to stop and she has no income then the OR cannot take anything from her. They are not allowed to ask you to pay towards her debt.

  25. Ali says:

    Hi James. I have received a demand of £40k from MIB, only £3k of which is the personal injury element, £4k legal fees and the rest they are yet to explain. Will declaring bankrupcy help me wipe the debt? (I’m aware personal injury payments are exempt)

    Will my two children’s ISA accounts and wife’s bank account remain unaffected? Me and my wife do not own any assets or have joint accounts. She does not work and have any income.

    1. Hi Ali

      By MIB I assume you mean the Motor Insurer’s Bureau? As far as I am aware this demand can be included in bankruptcy. As a result it would be written off yes.

      If you go down this route you do not need to worry about money in your children’s ISAs. This is their asset and not yours and is not at risk. The same goes for your wife and her bank account. Her account would not be affected and she could continue using it.

  26. Brett says:

    HI, I am separated from my Wife and have 2 children that live with her. She is bankrupt and has an IPA. I still pay most of the bills and give her around 150 p/m towards the kids. We are considering getting back together with me moving back in, my main worry is that although she works and takes home around £320 per month plus Child benefit of £140ish per month.

    I take home around £3200 with personal debt outgoing of £270 a month, how would I be affected? Would she be responsible for a portion of household bills etc even if they were in my name? The main reason for the split was her debt and financial irresponsibility. I also have a good amount of savings. I don’t want to fall into a financial rabbit hole again.

    Many thanks

    1. Hi Brett

      You moving back in with your wife would not affect her IPA in any way. In fact she would not need to inform the official receiver at all. She only needs to contact them if her personal income goes up. Given her personal income will remain unaffected she does not need to inform them.

      Equally non of your savings will be at risk.

  27. Elle says:

    I am looking to go Bankrupt shortly. I have around 30000 in debt and 10000 self employed tax debt – with some saved for this but not due until jan 2020.

    I have recently found I’m pregnant and will become insolvent when I go on maternity leave as I won’t be able to cover my payments. I am worried I will receive BROs for not setting enough aside for tax. I’ve made some preferences to paying off creditors – however these have then been respent so all currently stand the same – does this still count as preference?

    Also the joint account I have with my husband is a horrible mess, we both have big salaries paying in way over our bills (not including debts) I put in more money than him for bills and he often takes money in and out and sends money to his mum and dad and everywhere. This often means it eats into money I have put in. Will this effect me in terms of giving money to family and friends?

    Sorry for the long message and hope it makes sense! Any advice appreciated

    1. Hi Elle

      I think your concerns regarding bankruptcy are unfounded. One of the reasons the Official Receiver might consider a BRO is if you owe significant HMRC debt. However it is by no means guaranteed. I think a BRU in your case is unlikely as you had planned to pay the tax you owe but the fact you have become pregnant has meant this may non longer be possible.

      That said if you were to get a BRU it is highly unlikely to make much of a difference to you.

      In terms of your joint account do not worry about being accused of giving money to friends and family. You have not made preferential payments towards debt that you owe so there is no real issue. If you are considering this route I would advise that you take your name off this joint account and open a basic account in your own name and start using this from now on. This will separate your income from your husband’s and ensure you are more in control.

      If you would like to discuss your situation in more detail please don’t hesitate to contact me (0800 077 6180).

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