Are you ineligible for Bankruptcy if your spouse could bail you out?

Comedy · 6 October 2015 at 11:53PM

So, here is all the important details in short:

My wife has accrued a large amount of Credit Card, Payday Loan, Unsecured Loan and Store Card debt.

I would estimate it to be around £30,000

These debts have been accrued over about 18 months.

We have been married for less than 6 months.

We have no joint finances whatsoever.

The house we live in is rented, we split bills and the money for them is paid to my account to be paid out. About £1,000 each p/m. Plus car cost and fuel her minimum costs for the month are around £1,400

Her monthly income is around £1,900

Her card payments I would estimate to be around £900-£1,000 a month. These are well in arrears.

This puts her over budget each month already.

For me - in brief - I have debt also with around the same monthly payments, my income is higher and I am left with around £200 of free cash each month after all outgoings. All my payments are and always have been up to date, I am not over any limits (although close) and I have no historical defaults. I just don't have much free cash at the end of the month

I also have a property which I own and rent out. I bought it before we were together, the two of us have never lived in it. It has some equity but negligible. It gives me a little top up each month and is also something for me to be able to pass on to our children one day.

Now... The actual question...

I've spoken to my wife about this and I believe she should declare bankruptcy. She has discussed this but tells me the specialist she discussed with believes she would not be eligible for Bankruptcy, nor a Debt Management Order, nor an IVA.

The reason for this is that they would take my income into account for this to calculate her expenses - so basically would say 'you no longer split these bills 50/50, instead he pays more and you repay your debts'. Naturally this would push me into the same situation.

So, is this right? I have spoken to specialists myself who all tell me that she is in a prime position to declare bankruptcy, that I would not be held liable for any of her debts and that declaring that we split our bills 50/50 would not be challenged when calculating her free income.

Sazzie23 · 7 October 2015 at 2:39AM

I don't know the position wether shed could declare bankruptcy, I think she could but I'm not an expert.

Maybe if she's not ready to go bankrupt, (there can be work consequences depending on your job), consider a DMP. I'd recommend the stepchange debt remedy, you can do it on-line and together if you wanted. It can be anonymous of you wish too, so you could do it it for her and show her the result if you needed.
Many folk start as a DMP then move to a DRO or IVA after they've had time to consider all the consequences.

If you are nearly hitting your own credit limits, I'd say (rather rudely of me so apologies) that maybe you need to both look at your spending habits very hard. Remember many people on DMP hadn't missed a payment before they hit crisis. Sorry if that sounds harsh but I accrued a lot of debt due partially to the OH having expensive habits, always wanting the best (ok if you can afford it), and me not being strong enough to say no we can't afford this.

Lots of other reasons too for me, wasting money as I was unfulfilled/unhappy, but supporting your new wife through this will be a big test of your marriage. I hope you both find a way through it.

Comedy · 7 October 2015 at 8:58AM

Thanks for the advice. I understand what you're saying about mine but they are going in the right direction and will be cleared without the need for a DMP, IVA, Bankruptcy or anything else.

For work reasons I can't enter in to one of those and I am the only one in the household who has a stable job.

What I really want to know is just whether she can. Her employment is not regular so she really has no way of paying any of this off.

Money_maker · 7 October 2015 at 9:02AM

She might be best ringing Stepchange and talking through her options with qualified counsellors. They can give her free debt advice which is correct.

sourcrates · 7 October 2015 at 9:28AM

Hi,
You have been mis-informed by your "advisor". As long as your wife can muster the current fee of £705.00 to declare herself bankrupt, then she is free to do so.

Your income will not figure in that equation, at all.

Bankruptcy normally lasts one year, and she may have to make monthly payments towards the bankruptcy.

Stepchange or national Debtline can give you more specific advice.

DandelionPatrol · 7 October 2015 at 9:47AM

Comedy wrote: »

Now... The actual question...

I've spoken to my wife about this and I believe she should declare bankruptcy. She has discussed this but tells me the specialist she discussed with believes she would not be eligible for Bankruptcy, nor a Debt Management Order, nor an IVA.

The reason for this is that they would take my income into account for this to calculate her expenses - so basically would say 'you no longer split these bills 50/50, instead he pays more and you repay your debts'. Naturally this would push me into the same situation.

Well, I have to ask who the advisor was. It sounds like a well meaning but uninformed volunteer. Go to a specialist agency such as Stepchange or National Debt line and get it checked out.

Comedy, your own assets are safe and your wife must pay her due proportion of living expenses.

I think that the biggest issue will be with whatever she spent the £30,000 on. If it is assets such as furniture and cars, I think these could be reclaimed, even if they are in joint names or in your name. And if it is things like holidays from which you benefitted, you could find yourself under some pressure. In your position, I would be looking at the extent to which I had benefitted from the debt and I would make provision.

AndyBSG · 7 October 2015 at 9:58AM

Last year the wife of Martin Freeman, of the Hobbit and The Office fame, went BR despite him being worth over a million.

http://www.telegraph.co.uk/news/politics/labour/11504745/Hobbit-star-Martin-Freemans-partner-says-f-the-Tories.html

[Deleted User] · 7 October 2015 at 12:07PM

Thanks for that bit of showbiz gossip! What next, Katie Price getting her boob jobs as a business expense.

National_Debtline · 7 October 2015 at 2:00PM

When you go bankrupt the Official Receiver (OR) will look at the bankrupt person’s budget in order to assess them for an Income Payment Arrangement. They may ask to see a household budget to determine how the household bills are being shared. They may expect the bigger earner to contribute more to the household – but this really is at the discretion of the individual Receiver.

You cannot be held liable for your wife's debts if you are not named on them. They should not decline a bankruptcy application on the basis that you may be able to financially help her with repayments (as they are not your debts you cannot be asked to do that).

Laura
@natdebtline

Comedy · 9 October 2015 at 8:11AM

DandelionPatrol wrote: »

Well, I have to ask who the advisor was. It sounds like a well meaning but uninformed volunteer. Go to a specialist agency such as Stepchange or National Debt line and get it checked out.

Comedy, your own assets are safe and your wife must pay her due proportion of living expenses.

I think that the biggest issue will be with whatever she spent the £30,000 on. If it is assets such as furniture and cars, I think these could be reclaimed, even if they are in joint names or in your name. And if it is things like holidays from which you benefitted, you could find yourself under some pressure. In your position, I would be looking at the extent to which I had benefitted from the debt and I would make provision.

The money wasn't spent on me. At times where I did benefit I would have made a larger contribution myself and not known that this side was being paid for on credit.

We went on a family holiday last year which I paid for completely, We got married and split the cost 70/30 with me paying the 70, I have been financially supporting the household during time she has been out of work (these are the things that have led to my own debts). No doubt I have been bought gifts using this but I would say that it's very very much the minority of it.

The advice to take me in to account was supposedly from Stepchange, I did speak to them myself and they told me they wouldn't give this advice.

I think the advice someone else posted here that these debts being hers and her needing to take responsibility for clearing them is spot on. We've since spoken about it and this is the way it will go.

Thanks for your advice everyone!

Elsewhere · 9 October 2015 at 11:29AM

Deleted User wrote: »

What next, Katie Price getting her boob jobs as a business expense.

I imagine she can - I should think they'd count as tools of the trade, though I wouldn't want to have to discuss depreciation with her.

Are you ineligible for Bankruptcy if your spouse could bail you out?

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