My Partner and Bankruptcy
- 29 Jun 2022
Your partner or spouse may be affected if you go Bankrupt. You need to understand the implications particularly if you have jointly owned property or joint debts.
Included in this article:
- Does your partner have to pay your debt?
- What happens to jointly owned property?
- Is their credit rating affected?
- What happens to your partner’s debts?
Rather speak to a person? Call 0800 044 3194 or click here to complete the form below and we’ll call you
Does your partner have to pay your debt if you go Bankrupt?
If you go bankrupt your partner will not have to pay your debts. Legally speaking as a third party they are not liable to pay debt that is just in your name even if you are married.
Despite this you do have to include details of their income on your application form. This is the case whether they are working, receive benefits income or a combination of both.
The Official Receiver needs this information to ensure each party is paying their fair share towards the household expenditures.
They will look at any household surplus income. This is will be shared between you both proportionally based on the amounts you each contribute. Your share will have to be paid towards your debts each month.
One way you may be able to avoid having to declare your partner’s income, is if you can argue you are just a lodger in their property.
What happens to Jointly Owned Property if you go Bankrupt?
Your partner’s share of any equity in a jointly owned property is protected if you go bankrupt. However yours is still transferred to the Official Receiver (OR) and has to be realised to help pay your creditors.
Your partner can buy back your share from the OR. If there is no equity in the property this can be done for a nominal sum plus solicitors costs. However where it is worth more an amount similar to the value of your share will have to be paid.
If neither of you are unable to raise the money to buy back your share of the equity after 3 years action could be taken to force a sale. If this happened your partner would be given their share of any equity released. Your share would be retained by the OR.
The Official Receiver does not want to force the sale of a jointly owned property. It would only happen if there is significant equity and your share cannot be released any other way.
Is your Partner’s Credit Rating affected if you go Bankrupt?
Your credit rating will become poor if you go bankrupt. However the rating of your partner or anyone else living at your property will not be affected.
The record that you are bankrupt does not show up on anyone else’s file. This is the case even if you and your partner are married. As such they can continue to apply for new credit if they wish.
Having said that the credit records of two people living at the same address can be mixed up. As such after you go bankrupt it is sensible for other adults living at the property to get a copy of their credit file to ensure no mistakes have been made.
What happens to your Partner’s Debts if you go Bankrupt?
Only unsecured debts in your name can be included if you go bankrupt. Debts in your partner’s name are not included and still have to be paid.
This will be a problem if they cannot afford to pay their own debts from their share of the household surplus income. You will no longer be able to help them pay from money you receive.
There may also be an issue if you have debts in joint names. You will no longer have to pay these after you go bankrupt. However your partner must maintain the payment as they remain liable to pay 100% of the outstanding balance.
Worried about how your partner will be affected if you go bankrupt? Give us a call for advice (0800 044 3194) or complete the form below.
Im considering bankruptcy as it seems the better option (currently in a DMP) which is dragging on and stopping my families life from moving forward – my opinion is why should they be penalised for my actions.
My query is I’ve been married for 7 years and living in my husbands home since then, we have a child – the house was bought by him, before we got together. He put the deposit down , he pays the mortgage and household bills. Would the bankruptcy try and take the home. Or would it just be my personal finances they would consider
Hi kj
From what you have said I would be confident that you do not have any financial interest in your husband’s property. As such if you go ahead with bankruptcy it should not be at risk. Having said that I would advise that you call us to have a chat about this before you make the final decision to go ahead (0800 044 3194).
In terms of the household finances you would have to declare both you and your husband’s income and the household living expenses in your application. However he will not be required to pay your debts. Only your share of any household disposable income will have to be paid to the Official Receiver.
Hi
I’m looking at going bankrupt. My partner recently got a car on finance. She didn’t have enough income to get finance so we did a joint application to show we could afford it- we got accepted. The payments come from her account, the car is registered to her, insured by her and I’m a named driver. I don’t yet see anything on my credit file about the finance. I just want to know can she keep the car if I claim bankruptcy – we aren’t married. Thanks
Hi Rey
From what you have said I am not 100% sure if the finance agreement is in joint names between you and your partner or just her name. If it is just in her name there should be no problem. You can go bankrupt and it will not affect the agreement. As long as the payments are maintained your partner can keep the car.
If the agreement is in joint names it could be more of a issue. You say that the finance does not show on your credit file so this suggests it is not a joint agreement. However if it is you must speak to the finance company before you go bankrupt and ask them what would happen if you go bankrupt. Most have no problem as long as the payments are maintained. However some will automatically cancel the agreement and want the return of the car.
You need to know how they will react before you make your decision. If you do not tell them it is likely they will find out anyway so better to be safe than sorry.
If your name is on the agreement and the finance company have no issue then again it should not be a problem to keep the car as long as the monthly repayments are affordable and maintained once you are bankrupt.
I am going bankrupt. I live with partner and our son. The house is in his name anyway and debt is mine. We are not involved and I stay in another room. He doesn’t want to get involved or me give his name on application.
He does have income. I pay him every month a portion towards bills and he pays larger proportion of bills. Do I have to give his name on application? Or only income?
Hi Jen
If you are no longer in a relationship with your ex the best way to describe your situation as simply lodging in his property. As such you can record the total amount you pay him each month as rent or “lodgings” on your application form.
You do not treat him as a member of your household and as such do not need to give his name or any details of his income on your application.