Your Partner is not responsible for your debts if you go bankrupt. However they may be affected in other ways.
Jump to article contents:
- Does your Partner have to pay your debt?
- Will your Partner’s Credit Rating be affected?
- How will a jointly owned property be affected?
- Can you keep your joint bank account?
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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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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.
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.
Hi my partner is considering going bankrupt. We are not married and the only joint “debt” is our mortgage. We remortgaged last year, so there is not equity there. We have 2 dependents together, will they force us to sell the house, and will my debts be affected?? (I have a car on finance, which I need for work purposes and for the children)
Hi Jodie
If you are a home owner going bankrupt does not automatically mean you have to sell your house. The official receiver is only interested in the property if there is equity in it. If as you say there is no equity and your partner goes bankrupt your home will not be affected as long as you continue to pay the mortgage as normal.
Important: The official receiver maintains their interest in the property for 3 years. They will review the equity in the 3rd year and if it has increased your partner’s share will have to be released at that time. To protect against potential house price increases he can “buy back” the official receiver’s interest for a fixed sum of £1000 + their solicitor’s fee.
And on your last point: Bankruptcy is an individual debt solution. Your debts and your credit rating will remain unaffected. You will be able to continue paying your car finance as normal.
Good evening James,
I live with my partner for 2 years and we both work full time. We have a baby of 14 months and my partner has also 2 children from his previous relationship. Whilst he has been paying half the bills for the house, his monies were never enough to contribute to our household or daughter after he had paid off just half the rent and bills, his kids child maintenance and pre-existing debt.
I have paid any difference for any medical costs, groceries, car repairs, childcare etc. assuming that one day things will improve. I found out a few days ago that being in desperation, he acted completely irrationally and for the past 6 months he took more credit cards and loans to make ends meet monthly , nearly tripling the debt he has as all the cards/loans are on a very high interest. After the shock of finding out, I tried to help and looked with him for debt solutions. It seems that things are that bad that only bankruptcy is the choice. I am writing to kindly questions a few things if possible;
– How does this affect me? We used to have a joint account together but as it has no debt or credit and after what I found out, we are about to close that. I got no debts and have the highest credit rating (999-experian) always paying my bills on time.
– His share of the house bills and his child maintenance and childcare costs come out of his regular account , where his wages are paid in. If he goes through this option and they freeze the account, would we risk delaying the house bills/rent and incur more charges and his ex to be receiving the payment on time for her bills to be covered too?
The only asset he has is the car we daily commute to work and which assists with school runs for his older children.
Many thanks
Hi
In answer to your questions if your partner goes bankrupt it will have little or no affect on you. You are not obliged to pay any of his debts and your credit rating will remain unaffected.
If his bank account is a current account he will need to anticipate that this will be closed within a week or so of him going bankrupt. My advise is he should open a new basic account which will remain open after he is bankrupt. This can be done just before or just after he msubmist the application depending on the bank’s policy.
He will be able to keep his car as long as it is worth £1000 or less. If it is worth more he may have to sell it and get a cheaper one.
If you would like further advice please don’t hesitate to get in touch (0800 077 6180).