Can I file bankruptcy without my spouse?
Bankruptcy can have a lasting effect on your finances and lifestyle, but it can also impact on your spouse. However, if it is the only viable option for removing your debts, it’s a good idea to be aware of how things work if you are married and need to apply to be declared bankrupt.
It’s important you speak to your spouse first before you make the application. Not only to make them aware of the situation but there may be a way that they can help you repay your debts, or find another solution without such a drastic impact on you both.
For now, we’ve considered whether you can file bankruptcy without your spouse and the implications.
Can one spouse file for bankruptcy?
Yes, you can file bankruptcy without your spouse. However, bear in mind that they will be affected if they share joint debts with you, and if you own property it may well need to be sold to clear what you owe.
Can you hide your bankruptcy from your spouse?
No, you won’t be able to keep your bankruptcy a secret if you and your spouse own your home or property together, or have any joint debts or sizeable assets that you co-own. Even if these do not apply, we do not recommend you keep your debts or bankruptcy hidden from your partner. It’s important they understand what you are going through, especially if it will impact them and given that they may also be able to help.
Joint debts and bankruptcy
If you and your partner have joint debts – such as a loan or mortgage – then once you are made bankrupt they will be liable for the whole amount. This is what is known as joint and several liability – and they will be expected to keep up with the repayments on their own. Creditors can chase them solely for payment, if they should fall behind.
If you and your partner both apply for bankruptcy, neither of you will be liable for the joint debts and they will be written off in the bankruptcy.
Bankruptcy and your partner’s belongings
Your partner should be able to keep all of their assets if you declare yourself bankrupt. This means they won’t have to give up any of their wages or savings, high-value possessions they own themselves or their shares in any property.
If you own things together – say a vehicle – your partner can either buy out their share or it will be sold. They will receive their half of the money when it is sold and the other half will be put towards the bankruptcy.
Gifting and selling items of value to your spouse during bankruptcy
It’s important to note that you must not give or sell any items of value to your spouse to leave them out of the bankruptcy. This is bankruptcy fraud and is an offence. If you are caught doing this you could be fined or even sent to prison and the bankruptcy restrictions that last for the 12 month period of the bankruptcy could be extended for up to 15 years.
High-value gifts you’ve given your spouse
Anything of high value that has been given to your partner – such as a vehicle or even expensive jewellery – may need to be given back and sold in your bankruptcy. It’s also worth noting that the official receiver can go back five years to claim these.
Your home and bankruptcy
It’s very hard to keep your property when filing for bankruptcy and even if your spouse owns it jointly, it’s unlikely they’ll be able to secure enough money to prevent it from being sold, if there is substantial equity. However, here are the options available if you do wish to stop your home being used as an asset:
How this would work
1. Your spouse buys out your share
Your share in a property is called your beneficial interest. If your spouse can purchase this then the property will become solely theirs.
2. A family member or friend buys out your share
If your partner is unable to, a relative may have the money to buy your share to allow you to keep your home.
3. You may be able to buy time if you have dependents
If you have family living with you which is dependent on you, the sale of your home can be prevented for up to a year while you find other living arrangements.
4. Wait to see if any action is taken against your home within three years
If the official receiver dealing with your bankruptcy doesn’t make a decision on what to do with your property within three years from when the bankruptcy started, ownership will go back to you and your partner.
If you cannot avoid your home being sold, your partner will receive their share back, after the sale. We have more details here about what happens when you declare bankruptcy and your home.
If you are considering bankruptcy but are unsure how to tell your partner about your debts we can help – this post goes through in detail what to expect and how to approach the subject to make things a little easier. If you need to talk about your debts with an impartial advisor, our team of experts are available via phone on 0800 280 2816 or visit our contact us page for our call back form.