Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Hi

Thanks for your message and welcome to the forum.

DRO’s and Bankruptcy do have differences, although they are both insolvencies that look at writing off problem debt. DRO’s have stricter criteria to meet but as both options are applying to the Insolvency Service to write off debt, they will review each applicant’s financial situation.

Your husband wouldn’t be expected to pay towards your debts, but you would be expected to be paying a fair payment towards the shared costs based on your income and the household expenses. In bankruptcy the Official Receiver, who overlooks the process, can set an income payment arrangement into the bankruptcy. This means if you have more than £20 available at the end of the month, after household bills and general living costs have been paid, then this would be paid each month towards the bankruptcy for a maximum of three years. The reason they may request a joint household budget is to make sure you’re not paying more towards the bills than your fair share. For example, if you earn less then it might be expected you’d pay a proportionate amount towards the bills rather than half.

Your husbands credit file wouldn’t be impacted unless they defaulted on debts in their name and assets in their name wouldn’t be impacted either, unless it was seen that you have a beneficial interest in those assets. For example, someone living in their partners mortgaged property might be seen to have a beneficial interest and that could be affected in insolvency, even if they aren’t named on the mortgage.

When it comes to assets ultimately this will be the Official Receiver’s decision and may come down to who has purchased the items and who’s name is it registered in, especially with a vehicle.

I’d recommend getting some free debt advice to get a better understanding of the options available to you. For a DRO you’d have to go through a money advisory service to help with the application, for bankruptcy the Insolvency Service will expect an applicant has been recommended this solution by a third party
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If you’d like to get advice through us at StepChange we’d be more than happy to help. You can find the contact details here.

Thanks
Rachael

Lal1980 wrote: »

Hi.
Thinking of going bankrupt or either a DRO as I'm on the sick and don't know when I will be back into work, due to my illness I'm going to decrease my hours also as I cant cope with my current hours so the extra pay I normally have isn't/won't be there to pay my creditors. I'm wondering where my husband's finances will come into it if I do apply for a bankruptcy or a DRO, he earns more than myself as I only do part time as we have 2 kids under 4, will they take his earnings into account? He has his own expenses to pay out and run a car as we live in a rural area and getting to work would be extremely hard to do without his car, he also has his own small debts to pay off, we pay 50/50 on household and utilities.
I would be really grateful if someone could clarify as I'm searching for answers and all it says is that his credit rating won't be affected, I don't want to apply and be told that my husband should be paying for my debts as he earns more.
Many thanks in advance.