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 I I separated from my wife, we have been married for 7 years with a 4 year old, I bought the house 4 years ago and it is in all in my name, my wife has about 14k debt all in her name.
how would that affect me and the house sale?
thanks
Hi Danny
Even though you are separated your wife is still likely to have a financial interest in your house unless you have a court order stating she does not. Given you do not have such an order, if she were to go bankrupt your property could be at risk.
The starting point of the official receiver would be that 50% of any equity is hers. You can reduce the amount of shared equity by the amount you paid for the deposit. However 50% of the rest would be claimed. If this is minimal it is not a big issue because you could just buy it back from the OR. However if it is a significant amount you would have a problem.
What if I am on a joint mortgage with my partner but the property itself is solely in my partners name? Will the property still be considered ?
Hi Lynda
This is not straight forward. On the face of it if you are not married and not named on the land registry then the official receiver would have a hard job proving you have an interest in this property. However, if the mortgage is in joint names then the OR may try to argue that the intent was for you to have an interest.
It will therefore boil down to what if anything you have paid towards the deposit or mortgage payments. If you have never made any payments and your name is only on the mortgage for convenience (ie because your partner could not get a mortgage on his own) then there should not be a problem.
That said, I strongly suggest you do not go bankrupt without taking expert advice about this first. If you would like to speak to me please give me a ring (0800 077 6180).
I am looking at going bankrupt due to sad reasons and not through carelessness. My partner does not want to give his bank statements as they are his property and we don’t have a joint account. What do I do about this and do we just do 50/50. We have a joint mortgage but very little equity in the property.
Many thanks
Hi Emma
Your partner does not have to worry. He will not need to give any of his bank statements or any other of his personal documents to the official receiver. They can only ask for your documents.
Given you are joint mortgage owners you will need to provide a household income and expenses budget in your application. This means you must record both your incomes and all the household expenses combined (the fact that you do not have a joint bank account is irrelevant). If there is any surplus then this will be split between you. But the OR can only take your share not your partner’s. If you have no surplus then you would not have to make any further payments so it will not matter.
I understand that you have very little equity in your property. Remember you will still need to buy back your share of the equity from the OR at some point (unless the property is in negative equity). There is more information about this here: What happens to home equity in bankruptcy
Given you are a home owner (even though the equity is minimal) I do suggest you speak to an expert before going ahead so you fully understand the implications. Please give me a call if you would like. I would be more than happy to have a chat with you (0800 077 6180).