How is my family affected if I go bankrupt
- 13 Dec 2021
Family members or other people you live should not be affected if you go bankrupt. They will not be blacklisted and their belongings are not at risk.
Included in this article:
- Can family members still get credit?
- Are any of their belongings at risk?
- Do family have to pay towards your debt?
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Can family members still get credit if you go bankrupt?
The credit rating of any of your family members is not affected if you go bankrupt. This also goes for anyone else living in the same property with you. Their ability to get credit will not be impacted because your bankruptcy can’t be recorded on their credit file.
Your situation will not affect any future applications they make for credit. Of course they may still be rejected because they do not pass the lenders credit check for other reasons. But this will have nothing to do with your bankruptcy.
If you have a joint bank account with a family member, this will be recorded as a financial link with you on on their file. It is normally a good idea to take your name off any such accounts as there is a chance such links would affect negatively them. Although the risk of this is small.
Your bankruptcy will negatively affect your credit rating for 6 years. That said, there are things you will be able to do to start improving your credit score as soon as your bankruptcy ends after 1 year.
Are any of your family member’s belongings at risk?
Belongings owned by your family members are not at risk if you go bankrupt. This is because only things that belong to you can be considered as your assets in the process.
That said, there is really no reason to worry about general household belongings whether or not you own them. Things like your TV, fridge freezer, iphone and laptop are simply not of interest because they are generally worth little or nothing on the 2nd hand market.
If the car you drive is owned by a member of your family, it is not at risk. Even if you are borrowing the vehicle long term and you are the registered keeper and pay for the insurance and road tax, it is not your asset. It still can’t be taken away from you because ultimately, it is not yours.
Where you live in a property owned by a family member, it is not affected by you going bankrupt. It is not blacklisted and the owner can’t be made to sell it to pay your debts. The only time it could be at risk is if you have built up a financial interest in it or you are a joint owner.
The Official Receiver has no interest in any of your household belongings unless they are individually worth more than £500 (second hand value).
Do family members have to pay towards your debt?
Your bankruptcy is specifically related to you. Your family members do not have to pay your debt.
If you are living with your parents, you will not have to disclose anything about their income or living expenses. Financially speaking, you are a lodger in their home and totally separate financial entity from them. Your debt can’t somehow become linked to them. They do not become liable for any of the money you owe.
Where you living with a partner or spouse, you will have to provide a household living expenses budget. This includes information about both your incomes and all of your joint living expenses. However, if there is any household surplus income, only your share will have to be paid towards your debts. They will keep their share.
If you have no income yourself and are being supported by your partner, neither you or they will have to make further payments towards your debt once you are bankrupt. Even if they are wealthy and could afford to pay what you owe, they are not obliged to do so.
Need more free, confidential advice about going bankrupt if living with family? Call (0800 044 3194) or complete the form below.