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 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.
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.
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
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.
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
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).