Spouses and Partners in Bankruptcy

Another question I get asked a lot is if someone goes bankrupt, does it affect their partner or spouse.

If they have no joint debts or assets the stock answer is no, it does not affect them, but the reality is in some ways it does affect the partner or spouse not going bankrupt.

It does not affect their credit, unless again they have jointly held debts or assets, and they are not a party to the other’s bankruptcy; however there are some small ways they can feel the impact of the bankruptcy.

One is that the address used by the bankrupt is now showing someone has gone bankrupt there, not that it is a huge deal, but if the other person applies for credit it may show up, at which point it may only slow down the process of receiving the credit applied for, as again, it is not their bankruptcy.

If it was to become a problem the partner or spouse not going bankrupt could send a notice of disassociation to the credit bureaus and this is outlined on the major credit bureaus web sites.

The other small way a bankruptcy may impact a partner or spouse has to do with how the household expenditures are shared and wages coming in are handled.

If the person going bankrupt has little or no wages, it will show on the income and expenditure form and the Official Receiver can very well ask how are you living?

They may want to know the non-bankrupt’s wages and/or contributions to the expenses.

This does not mean they are a part of the bankruptcy and they would not be asked to pay into the bankruptcy, but the OR needs to get a clear picture of how the person going bankrupt is living and how their finances are structured.

And one last way it may affect the non-bankrupt partner or spouse is the emotional toll, this being on both parties.

Hopefully there has been sufficient communication and the relationship is strong enough that they can weather this transient time, as that is what it is, a moment that will pass.

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