If your partner declares themselves bankrupt and you have a joint home/mortgage then clearly this is going to be a very worrying time.
The good news is that mortgages (being secured debts) are not directly affected by bankruptcy which only applies to unsecured lending (credit cards, personal loans etc.). As long as you and your partner have the income to pay the monthly mortgage payment then this will continue as normal.
The bad news is that the value of your partner’s equity in the home will probably need to be paid into the bankruptcy to provide funds to pay back your creditors. In the UK this would always be in the case but in the US there are state-by-state rules on whether your primary residence is exempt from bankruptcy.
In the UK you will be given a period of 12 months from the date that bankruptcy is declared to reach a settlement with the person administering the bankruptcy (either a trustee or the insolvency service). If no agreement can be reached then a sale will be forced after the 12 month period has passed.
If the value of your home has dropped to below the value of the mortgage then you can buy your partners interest in the home for a notional figure. This is one of the rare occasions where negative equity is a good thing.
Tags: Bankruptcy, debt, Debt Advice, Debt Solutions, mortgage bankruptcy
If your partner has debt problems then you need to know about it, because sooner or later it is going to affect you. Not opening their mail, or other odd behavior relating to things that are mailed can be a sign that someone is experiencing debt problems. If someone in your home is not opening their mail then it may be because they don’t want to face up to the problems that they have. Of course it could just be that they are not very organized!
Other mail-related signs include rushing to get the mail so you don’t get a chance to open it or see it or if you stop seeing statements that used to be left for all to see.
Another give-away is your partner receiving a lot of mysterious calls at home. When asked they might say that it was “just a salesman” or a wrong number. Very like the behavior that you might expect from someone with a secret lover!
If you suspect that your partner has a debt problem then the only solution is to ask them about it. They may be reluctant to speak about it but bringing the issue out into the open (or proving that there is no problem) will be the best thing for your relationship.
Tags: Debt Advice, debt assistance, Debt Problems, family debt problems
You may have met people that say “I’m going to declare myself bankrupt” and I won’t have to pay back any of my debts including my mortgage. There is nothing to stop you declaring yourself bankrupt if you have a mortgage. However please note that secured debts (like mortgages and car loans) are not directly affected by declaring bankruptcy. After you are declared bankrupt you will still need to pay your mortgage/secured loans.
Declare Myself Bankrupt and Lose my Home?
There is no reason why you should have your house re-possessed just because you have declared yourself bankrupt. So long as you have the income to pay your mortgage payments everything will go on as before. You may have to sell your house to pay your share of any value above the outstanding mortgage amount into your bankruptcy (in the US there are state-by state rules regarding exemptions for your home). If this is the case then the courts can force you to sell your house. This can sometimes be avoided by careful planning before bankruptcy is declared, by selling your share of the house to a relative or your partner.
You should consider the bankruptcy alternatives and find as much information on bankruptcy as you can. It is a serious step and you should not consider filing for bankruptcy without thinking through the consequences.
If you live in the UK and share ownership of your house with a partner then a sale will not be forced until at least a year after bankruptcy is declared. This is nor part of bankruptcy law but is the normal procedure followed by the insolvency service.
Tags: Bankruptcy, Debt Advice, mortgage debt
