If I Declare Bankruptcy, What Happens to My Joint Debts?
As the stigma surrounding bankruptcy reduces more and more people are choosing this solution to deal with a debt problem. However this process will not protect their spouse or partner who will be left with responsibility for 100% of any joint balances.
If you declare bankruptcy, all of your debts are taken away. You will not be asked to pay anything towards your debt unless you can afford to do and after 12 months you will be discharged and the restrictions of bankruptcy lifted.
As such, for many – particularly those who rent their home – bankruptcy is an extremely good way of resolving a debt problem.
However, if you have debts which are in joint names with someone else for example a joint bank loan or overdraft, the joint account holder will not be protected.
Joint liability
Taking a debt in joint names means that both parties have joint and severable liability for the repayment of the debt. If one person is subsequently unable to pay or declares bankruptcy, the other party remains responsible for the full outstanding amount.
