Ms P asked “I want my partner to move in with me but he may have to go bankrupt so we need advice on the timing. He has got a lot of debt trying to keep his business going but it doesn’t seem to be working. I have a house with a lot of equity and we don’t want this to be at risk at all.
The question is if he moves in now and goes bankrupt in a few months, will that cause a problem? Or is it best if he goes bankrupt first, then moves in? Or would it be better then to wait a whole year until he is discharged? I know this doesn’t sound romantic, but my house is important to me and to our future!”
Bother romance, those sound like very sensible questions to be asking to me! The good news is that your house is safe in any of these three situations.
The debts aren’t in your name
They are his debts not yours. You don’t have any legal responsibility for them if you are living together. This won’t change even if you get married.
His credit rating may not be good at the moment and if he goes bankrupt it will be bad for six years. But this won’t affect you if you are careful not to get any financial links with him – no joint bank account, don’t try to put his name on the mortgage or the deeds, don’t offer to guarantee any of his debts.
He hasn’t contributed anything to your house
Your house is in your name only. Sometimes someone has “beneficial equity” in a house they don’t own, in which case this beneficial equity would be at risk if they go bankrupt. But it doesn’t sound as though this will apply to your new partner:
- he didn’t provide any of the deposit when you bought the house;
- he hasn’t helped you pay the mortgage;
- he hasn’t paid for all the other expenses whilst you paid only the mortgage;
- he hasn’t paid for improvements such as a new kitchen or new windows.
You have acquired the equity in your house before he moved in, and so this equity is safe if he goes bankrupt.
If he delayed going bankrupt for many years, during which time he he helped you pay the mortgage, the Official Receiver (the person from the government’s Insolvency Service who looks into bankruptcy cases) may argue that he has acquired some beneficial equity. But that isn’t going to happen here, even if he moves in and then doesn’t go bankrupt for a year or so.
When should he go bankrupt?
With most people, if they think they are going to have to go bankrupt in the next year or so, it’s probably a good idea to get it over and done with, to have a clean start. So they should get some debt advice to check if this is their best option and then get on with it.
But there are extra considerations for people who are self employed or who have a small limited company:
- is it hard to see the true picture because their business and personal accounts are mixed up?
- could their business realistically improve so they don’t need to go bankrupt?
- what has to be done to close down the business – or can the business continue after personal bankruptcy?
- is their accountant making worried noises about “trading whilst insolvent”?
- have they not been able to afford to get their accounts done recently?
- do they owe money to the tax man? etc
In this sort of situation, it would be good for him to contact Business Debtline sooner rather later, to see what his options are. They are a charity who specialise in advising people who are self employed or who own a small business about their debts.
A checklist for going bankrupt
Completing the online bankruptcy application
Bankruptcy timeline – what happens when
Norm says
I’m in the same situation living with my partner for 10 yrs we have no joint bank account it her house but I’m worried because we have been togreather for 10 yrs will they inform her of my bankrupt also will the house have a black mark on it and will they make her pay for my depts,
Sara (Debt Camel) says
The house will not get black listed. There will be no effect on your partner’s credit records if you do not have any joint accounts. She won’t be asked to pay towards your debts, but the Official Receiver will expect that she pays a fair share of the bills.
The problem you may have is if the Official Receiver decides that you have some beneficial equity in her house because you have been helping her pay the mortgage or the bills for so long. I think you need some detailed advice on your situation here. You could go to your local Citizens Advice or talk to National Debtline on 0808 808 4000. They can also look at whether bankruptcy is a good idea for you – it’s always good to check if you have any other options.
Even if there won’t be a problem with beneficial equity, it really isn’t a good idea to try to keep bankruptcy a secret from your partner. She may want to do something that would seem to be great, but you can’t because of your bankruptcy.
Darren says
Could you please clarify a point for me. I’m privately renting and went bankrupt in July 2016. My partner wants me to move into her mortgaged home. Obviously if I move in I will be contributng towards the mortgage and bills. I currently pay an IPA as well as CSA and my partner also has a child living at her address. The question is, with the OR accept that I intend on contributing towards the mortgage and increase my IPA or state that I am not responsible for the mortgage and seize what would be my rent payment?
Sara (Debt Camel) says
The OR won’t expect you to live rent free. If you want an estimate of what your likely IPA would be, you could talk to a debt adviser. If you want a quicker indication you could or post details of what you expect your income and expenditure will be here: https://forums.moneysavingexpert.com/forumdisplay.php?f=136.
Jen says
I libe at my partner’s house. We are not involved romatically but he is father of my 5 year old. I am thinking going bankrupt. He is my landlord and I pay him monthly amount. Do I have to declare my landlord is a father of my child/ do i have to state his name?
Sara (Debt Camel) says
I think you need to talk to a debt advisor about this situation. Try your local Citizens Advice or, if you prefer telephone advice, National Debtline.
Geoff smith says
Hi, I’ve been married for 11 years but my house, mortgage and bills are all In my name as I had the house before I met my current wife. She has never contributed to the home in any way due to her own on going debts. She is now considering bankruptcy and I wanted to know if you thought the Receiver would think she is entitled to an equity share in my house. Many thanks
Sara (Debt Camel) says
After 11 years her OR is likely to consider if she has any beneficial equity even though you already owned the house before you met. If she has never paid the mortgage or other house bills you may be fine, but I think you should talk through the situation in detail – you could call National Debtline and/or post on this forum https://forums.moneysavingexpert.com/forumdisplay.php?f=136.
Charlie Evans says
Hello if my partner were made bankrupt what would happen to the house we live in? I bought the house 5 years ago with cash and it was solely in my name. I gifted it to her in February 2018. It is now soley in her name. However my money was used to buy it and maintain it as my partner has not worked for many years. Could I argue that I have a 100% ‘beneficial interest’ and prevent the house being sold?
Sara (Debt Camel) says
I gifted it to her in February 2018. It is now soley in her name.
This may depend on the wording of this “gift”, but there sounds a real risk the OR may consider the house is hers and claim it.
If you are well enough off to own a house outright and give it away, I suggest you need to pay for some good legal advice about this urgently..
Josh says
My wife has debt that she accrued before we met. We married in 2016 and I bought a house in 2017. Given that she had no assets or savings the house is in my name only, given that she could offer nothing financially and her credit rating was likely to prevent the purchase. I pay the mortgage and financially support us both as she hasn’t worked for 4 years due to mental health issues.
She was granted an IVA at the beginning of 2018 which she managed to pay for 12 months before that became unsustainable. It has since been terminated.
She is considering bankruptcy, I just want to make sure that there is no beneficiary interest in my property. She is not on the deeds and she has not provided financially towards the house, bills or improvements since it was bought.
Sara (Debt Camel) says
Your wife needs to talk to a debt adviser about whether bankruptcy is a good option for her or whether she has a better alternative. Part of this is whether she may have any beneficial interest in your house. From what you have said, it sounds unlikely, but it is important to discuss this in detail with a debt adviser.
I suggests she phones National Debtline on 0808 808 4000.
Reg says
Hi my partner recently lost a court case and is now in debt around £30,000 she cant pay the debt we are not married and live in a council property the problem i have is we are buying the house at the moment and im thinking about removing her from the application and having my name on the house only . I dont know what to do for the best or how it will affect us
Sara (Debt Camel) says
I think you both need to talk to a debt adviser about the options here. I suggest you phone National Debtline on 08098 808 4000.
Lisao says
I have a lot of equity in my home. My mortgage is in mine and my ex husbands name, though I have paid it for 12 yrs on own(lived here 20yrs). My partner moved in 5 yrs ago, giving me money to contribute to costs. He is now facing bankruptcy. I do not consider he has any financial interest in my home but am concerned reading this page that an OR might consider he does. I actually owe a lot more on my mortgage since meeting him, would that impact?
Sara (Debt Camel) says
Can I ask why your mortgage has increased?
Ceriann says
Hi, hope this will be answered.
My husband is discharged from bankrupsy since 2022. If he moves into my mortgaged home, will there be any implications? The property will remain solely in my name. Also, can we get married and have no financial ties stemming back to the bankrupsy?
I was a person of interest to the OR due to him borrowing large amounts of money and then giving it back over a period which was considered in his bankrupsy, if that makes a difference.
Thank you
Sara (Debt Camel) says
Normally the answer would be No, no implications. But given your past history together, I think you should talk this through in detail with a debt adviser. I suggest you go to your local Citizens Advice, they will be able to get help from the national Specialist Debt Advice Service if necessary.