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Should I tell my fiancée that I'm an ex-bankrupt?

Tuesday, 12th May 2015

No one is perfect. Anyone of us could make a bad financial decision during our lifetime, but what if it leads to personal bankruptcy, is this so heinous that we have to keep it from our loved ones?

I have had numerous calls from people that have posed that very question, do I need to come clean about my bankruptcy or can I just forget it?

So what can be that damaging? You don’t have a criminal record, and okay, you may have had bouts of unemployment, most of us have from time to time but you are now working full time. So what can be wrong?

Her worse nightmare

One of my most memorable calls was from a lady that said this was her worse nightmare, she had met the fellow of her dreams and he had popped the question, never giving a thought that her past would one day catch up with her. 

Nicola is an old client of mine and came to me for debt advice many years ago after she had lost her job. No income and with credit card and personal loan debts of around £22,000 meant she had no other option.

Bankruptcy worked well for her, she cleared her debts and was now back in full time employment. Her immediate problem was that she felt a failure because she went bankrupt and now thinks that the new fellow in her life will think the same and she will get dumped!

It’s not a crime to be in debt

Many people I speak to see themselves as failures. I try to reassure them that they are not and that being in debt could happen to anyone of us.

I remind them that the last debtors’ prison shut around 148 years ago and that bankruptcy is a legal way of discharging unsecured debts. Many ex bankrupts recover to take on full employment, pay income tax and national insurance and therefore contribute to society.

Should she come clean?

So should Nicola mention her bankruptcy that occurred some seven years ago? It is a difficult call as a lot depends on individual circumstances.

If your fiancée cannot accept what happened before you met, especially after you have been honest and open about your past, then I have to question the strength of the relationship wouldn’t you?

Will her fiancé find out anyway?

There is a good chance this may well happen. An example would be if they were to move in together in rented accommodation. The agents acting on behalf of the landlord would conduct a credit search on both Nicola and her partner. Some argue that as it was seven ago then it would not be on her credit file so it would be obsolete but it may well be on the file if the bankruptcy occurred under six years ago. 

Anyone with shall we say, a chequered credit history, is usually asked to make a down- payment of a bond for between three to six month when renting a home. This means that if the rent is £800 per month then the deposit in advance could be somewhere between £2,400 and £4,800.

The matter is more complicated if both were applying for a mortgage. If after being granted the mortgage and it transpires that Nicola had hidden the fact that she was a previous bankrupt, as there is usually a direct question asking if any of the applicants have ever been made insolvent in the past, then clearly she has committed at worse fraud and at least been dishonest.

Should we all be doing a financial check on any prospective partners?

Are you marrying for love or money? If it is the former then you would not be bothered, but in these days of pre-nup agreements, I would not be surprised to hear of some individuals doing some snooping around to see what’s on offer.

More disturbing is the fact that it is not difficult to do a check on someone. I can easily search on my neighbours’, friends’ and any other individual to see if they are currently bankrupt so long as I have their name, and they would not even know I had done it. More on this another time!

 

 

 

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