Bankruptcy Vs IVA

Wile84

Hi there, am confused as to what my best option. I've given a brief overview of my situation below and hoping people can advise.

Approx £25k of debt.
£12k of this is ex business debt transferred to me under a personal guarantee taken out at the time
£13k of personal credit cards.

I am effectively unemployed at the moment, working part time where I can. In the process of interviewing. Any job I take however won't be enough to pay back the minimum payments etc.

My wife owns our home, I have never had any say in the mortgage etc. I pay a "board" every month to cover all utilities, rent etc. She also earns a very good salary.

Will bankruptcy affect her or the house?! Is her salary taken into account?
I guess I am not eligible for an IVA at the moment as have no surplus income available.

The idea of bankruptcy I am ok with but only if it doesn't affect her - this is my debt and not fair that it should negatively impact her at all

Minkym00

Bankruptcy won’t affect her house. Bankruptcy may have an effect on what you are able to give her in “board” though.

Her salary need not be taken into account, you don’t need to put it down. However, if you do, as she earns so much more than you, you will be allocated a lower proportion of the household bills...which could potentially give you a surplus for an IPA.

You and your wife are linked together on your credit file. Whether or not bankruptcy will negatively affect her I can’t say, others may advise.

[Deleted User]

With regards to your credit - if you do have a financial connection at the credit reference agencies (e.g. you've made a joint application at any stage, or have any joint products such as loans/current accounts) then you'll be linked.

The fact you're married (by itself) wouldn't link you.

So I'd check your financial connections across all 3 CRAs (and get your wife to check hers, just to be sure).

If you ARE linked then the bankruptcy MAY effect her - unsecured credit especially I'm sure they use associate data.

With regards to more "substantial" applications (e.g. mortgages), it's up to each company whether connection data is used or not.

If your wife has always had the mortgage in her sole name, then I think most companies would be OK with letting her carry on like that even if they discover you've been bankrupt (since, you aren't suddenly dropping off the mortgage to game the system).

Not sure about Beneficial Interest etc. in the house - if it's always been in her names then I agree with the above it seems unlikely.

Some jobs require you to list if you or anyone over 17 living with you have difficulties (police, financial services) so you might want to get her to check with her work HR (or similar) in confidence as to whether it'd be an issue.

I'm sure most reasonable employers would keep her on though - it's just getting new jobs might be more tricky whilst your info is easily accessed. If you've got joint CRA records and she goes through credit checks, that's 6 years. If you HAVEN'T got joint CRA records, then it's only (realistically) while your info is easily accessed in the public domain (1 year and 3 months post-bankruptcy) or if she's required to declare it.

Whether it's the right solution varies - there was a post on here recently from a 26 year old considering it over fairly low-level debt.

£25k is reasonably low (although I appreciate with you not earning, that may grow) - is there any way you can make arrangements to repay instead? It'll hit your credit file but is unlikely to be anywhere near as drastic as bankruptcy.

If you didn't pay your wife board for a while, could you cut the debts?

Not saying any of this is right for you, I'm not a debt adviser but I've gone through it myself. Bankruptcy is often more than people realise. I'm still having issues years later and owed a lot more than £25k!

fatbelly

Wile84 wrote: »

Hi there, am confused as to what my best option. I've given a brief overview of my situation below and hoping people can advise.

Approx £25k of debt.
£12k of this is ex business debt transferred to me under a personal guarantee taken out at the time
£13k of personal credit cards.

I am effectively unemployed at the moment, working part time where I can. In the process of interviewing. Any job I take however won't be enough to pay back the minimum payments etc.

My wife owns our home, I have never had any say in the mortgage etc. I pay a "board" every month to cover all utilities, rent etc. She also earns a very good salary.

Will bankruptcy affect her or the house?! Is her salary taken into account?
I guess I am not eligible for an IVA at the moment as have no surplus income available.

The idea of bankruptcy I am ok with but only if it doesn't affect her - this is my debt and not fair that it should negatively impact her at all

It shouldn't affect her.

In bankruptcy, beneficial interest follows title, i.e. if she owns the house solely according to the Land Registry then 100% of the beneficial interest is hers.

Her credit file will only be affected if you have a joint financial product, which it appears you do not.

Her income is only relevant to the extent of determining how much you should pay for your share of the household expenses in an income payments order. As things stand you have no income so no IPA/IPO. It sounds as if she would always earn more than you so it may be in your interest if she does not engage with the OR (she cannot be compelled to do so) and they would then assume a 50/50 split to the expenses.

Other things to consider would be:
your job - bankruptcy may limit opportunities depending on what your line is. I don't think you can stand as an MP if you have ever been bankrupt.
your assets - ordinary bits and pieces are ignored but if you have a collection of antiques or a car worth over £1000 that could count as an asset that the OR could seize.