Author Topic: What happens if only one of us goes bankcrupt?  (Read 1234 times)

What happens if only one of us goes bankcrupt?
« on: Feb 15, 2011, 07:34:26 PM »
Hi
 
 I've had some good advice from this site but could do with a bit more.
 
What would happen if my husband went bankcrupt but I didn't, some of our debts are joint.  Would we still potentially lose the house.
 
We failed our IVA in September and are only just starting to get a couple of letters from credit card companies.  We don't seem to be able to manage to save for both of us to go bankcrupt but could probably manage just one.
 
Have bankcruptcy laws changed with regards loseing houses??
 
 

shocksoc335

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Re: What happens if only one of us goes bankcrupt?
« Reply #1 on: Feb 15, 2011, 10:12:23 PM »
If only one of you decides to declare bankruptcy and the debts are in joint names the other party will become fully liable for the outstanding secondary credit debt - credit cards, loans etc. As you are both classed as jointly and severely liable this means the full debt and not half.

The house will depend on lots of factors if you have a large amount of negative equity, you may at the discretion of the OR be allowed to buy the negative equity back for £1.00 plus conveyance costs almost immediately.

However if you have some equity the OR can decide to deal with any beneficial interest in the property in 2 years and 3 months to allow you a family member etc to buy the interest back. This is a very new ruling and its unclear why specifically 2 years and 3 months. My personal view is that the economy may have picked up by then and the OR may release more funds to pay back towards the creditors.

The OR could also decide to place a charge ( security over any asset in the property ) to be released by sale of the property at a later date.

The clear distinction for you is that a joint debt remains in full for the other party and another remedy may have to be sought to repay these debts. 
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James Falla

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Re: What happens if only one of us goes bankcrupt?
« Reply #2 on: Feb 23, 2011, 11:38:47 AM »
Hi Jlees33
 
As Shocksoc has said, if only one of you decides to declare bankrupty, the other person will still be fully liable for any joint debts. However there is an advantage that only half of the equity in the property would be considered (the interest of the person who has declared bankrutcy).
 
Given your property is in negative equity, you would be able to buy back the interest in it for a the nominal sum of £1 straight away. However, if you do not do this then the OR can keep hold of the property. After 2 years an three months, the equity will be reassessed. If at that time, the equity is still less than £1000 the interest in the property is simply returned to the individual. If more and no offer to buy it can be made, then the OR has the option of either trying to sell the house to release the equity or placing a charging order on the property for the amount of the equity.
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