Is my partner’s house at risk if I go bankrupt
- 29 Jun 2022
Your partner’s house will normally be safe if you go bankrupt. As long as it is not your asset, it can’t be included as part of your bankruptcy. Their property will only be at risk if you have built up a financial interest in it.
Included in this article:
- How is your partner’s house affected if you go bankrupt?
- What if you are married?
- What if you have already moved out of the property?
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How is your partner’s house affected if you go bankrupt?
As a general rule, if you live in your partner’s house, it is not at risk if you go bankrupt. Given it is not in your name, you are not married and you have not built up a financial interest in it, their home is protected.
But what if you have built up a financial interest? It is possible to do this in a number of ways. One example is if you have paid your partner’s mortgage with your own money over an extended period. Where this has happened, it could then be argued you have an interest in the property based on the increase in value since you started making the payments.
You would also have built up an interest if you have paid for any material improvements such as a conservatory or new kitchen. Any value this has added to the property would be considered an asset if you go bankrupt.
If it can be argued that you have built up a financial interest, their property will be at risk if you go bankrupt. The value if your interest would have to be released and paid to the Official Receiver. Where it is not possible to do this in any other way, the property might have to be sold.
Your partner’s property is normally safe if you go bankrupt. However this is not always the case. The rules can be complex. Before you submit you application, make sure you speak to us for advice and assistance.
What would happen to your partner’s house if you are married?
Being married could mean your partner’s house is automatically at risk even if it is just in their name.
There is a general assumption that you have an interest in your spouses’ home if you have been married for a while. This is particularly the case if you have children together.
In these circumstances, you may well have legal rights regarding the property which could be relied upon if you were to divorce. Similar rights would be assumed if you go bankrupt. Perhaps up to half of any equity in the property could be claimed as your asset.
Where you have only recently got married, it should be possible to argue you have no interest. However, your spouse must have bought the property with their own funds and have maintained the mortgage payments with their own income.
Even if you have not contributed towards the property financially, if you are married, a share of your partner’s house could be claimed as your asset if you go bankrupt.
What if you have already move out of the property?
If you moved out of your partner’s property in the last 5 years, you still need to take care before going bankrupt. The Official Receiver can look back at any property you might have had an interest in over this time.
If you did not built up a financial interest by the time you moved out, there will be no problem.
However, if it could be argued that you had an interest (because you paid the mortgage, paid for material improvements or for any other reason), part of the property could still be considered to be yours.
The Official Receiver would argue a transaction at undervalue had taken place. This is because you gave your interest to your ex with nothing in return. They could then still claim the value of your interest and demand that this amount was handed over by your ex. Such a request could be enforced by court action if necessary.
If you live in a property which is owned in your partner’s name, do not go bankrupt without taking advice. Call us (0800 044 3194) or complete the form below.