What is the impact of my wife or husband’s sequestration on me?
June 15, 2016
The nature of sequestration means that your husband or wife’s assets are placed under the control of a trustee. This is the person in charge of selling the assets to repay creditors. In general terms you are not liable for the debts of your spouse, and cannot be ordered to repay their creditors, unless a debt is also in your name.
The nature of family finances can be complex, however, and you could become indirectly involved as the spouse of someone who is being sequestrated if jointly-owned assets such as property enter the equation. Although your share of the asset(s) still belongs to you, the situation can become a little more complicated.
Not all assets are included in the estate of a bankrupt person – most fixtures and fittings in the home, for example, may be exempt, as well as items needed for work or business purposes.
So what happens if you have a financial interest in property?
When your home is jointly-owned
As far as your home is concerned, if it is jointly owned, your husband or wife cannot sell the property without your consent. If this is not forthcoming, the trustee can make an application to the court to gain their authority to sell.
The same applies if you do not own an interest in the property, but have occupancy rights under the Matrimonial Homes (Family Protection) Act, 1981. Again, the trustee is able to apply to the court if they need to sell the property in order to repay creditors.
In these cases you can attend court to argue against the sale of your home, although this does not alter the trustee’s long-term interest in it as a major asset, the proceeds of which generally need to be used at some point to repay creditors.
Even if there is little equity in the property, the trustee has a period of up to three years in which to deal with it. They may revisit the possibility of selling at a later stage during the sequestration period, and can even take this action after your husband or wife’s discharge from bankruptcy.
Trustees understand the impact of losing a home, however, and will make attempts to offer alternative options.
Buying out your partner’s share
One alternative to selling the property on the open market is for you to buy your partner’s share – depending on your own circumstances, this may be possible via a remortgage or other type of investment plan.
If you and your husband or wife own a second property, whether that is a holiday home or rented out to tenants, it’s likely that this will be earmarked for sale as part of the sequestration arrangements if there is equity available.
Your ability to obtain credit
The financial association with your husband or wife could make it more difficult to obtain credit once they have been sequestrated. You can contact the three credit reference agencies, Experian, Equifax, and Callcredit, to request a ‘disassociation’ if this is going to be a problem.
Scotland Debt Solutions helps Scottish residents out of debt. We can provide guidance on what will happen during your partner’s sequestration, and advise on how to proceed should you be a joint property owner.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]