Are You (Legally) Responsible For Your Spouse's Debts? 5 Things To Know Before you decide to Marry A Bankrupt (Or you Are Married To One)
“Till death do us part.” Regardless of whether this really is or was part of your marriage vows, marriage does entail that responsibility towards your spouse. Sometimes, life isn't smooth-sailing and some individuals are handled a worse hand than most.
If you are in times in which the person you love and want to marry is in a bad finances and declared a bankrupt, you might be reconsidering your choices. If you are already married, you might be worried about how your children and household will be impacted by your spouse's bankruptcy. Before you decide in your next step, here's what you need to know in case your (future) spouse is bankrupt.
#1 Your Spouse's Individual Debt Before Marriage Doesn't Automatically Transfer To You After Marriage
If you are not yet married, rest assured that you aren't legally responsible for your spouse's debts incurred before marriage. However, this assumes you don't have any financial ties with him prior to marriage. Should you behave as a guarantor for loans and have opened some pot account with him, you're legally liable (both before and after marriage).
Your spouse's debt incurred before marriage will not be transferred over you after marriage. Likewise, your credit score won't be affected by your spouse's a bad credit score history, so long as you maintain separate accounts.
#2 All your family members Finances Are Likely To Be Affected
While you won't inherit his debts before marriage, your household money is likely to be affected. Like a bankrupt, your partner is going to be dedicated to a debt repayment schedule which will be determined by the Official Assignee. As the Official Assignee would account for reasonable house expenses within the debt repayment plan, you can expect much of your spouse's income would go towards debt repayment rather than contributing to luxuries, for example family holidays. Actually, your bankrupt spouse will not be able to visit overseas without the permission from the Official Assignee.
Additionally, gifts given by the husband to the wife (just before bankruptcy) might be claimed by creditors, if the husband becomes bankrupt.
If the wife loans money to her husband for his business, and the husband becomes bankrupt, the loan forms part of the overall debt owed but the wife remains last in priority after repayment of other creditors.
#3 A Bankrupt Can Buy An HDB Flat (As Both Owner Or Occupier)
Marrying a bankrupt wouldn't affect your ability to purchase a resale or BTO HDB flat together. The Official Assignee's consent is not needed if you're investing in a 5 room HDB flat or smaller. If you wish to purchase an HDB executive or maisonette flat, your bankrupt spouse must obtain the Official Assignee's permission first and prove you have both means and requires for such a flat.
Alternatively, your bankrupt spouse can also be included in to the flat purchase being an essential occupier. For instance, if the two of you are below the chronilogical age of 35, you have to form a family nucleus in order to purchase a HDB flat. This can be done as by including your bankrupt spouse as an essential occupier instead of a co-owner. As an essential occupier, your partner won't be able to contribute to the mortgage nor have legal rights towards the flat.
#4 Your HDB Flat Remains safe and secure From Creditors But Private Property Is Not
According to the Insolvency Office, your HDB flat remains safe and secure from creditors so long as one of the owners is really a Singapore Citizen. Which means that so long as you or your bankrupt spouse is really a Singapore Citizen, you don't need to worry about having a roof over your head.
However, you will still need to continue your home loan instalments to be able to continue retaining the flat. Generally, HDB includes a selection of financial assistance measures for people who have trouble repaying their HDB housing loans and you should approach HDB directly for more information.
If you have a private property with your bankrupt spouse, the non-public properties, HUDC and Executive Condominiums aren't protected from creditors and is seized included in the assets accustomed to repay creditors. Whether your loved ones home will be used to repay creditors is decided during the bankruptcy process.
#5 Bankrupt's Family Is Not Responsible for His Debts After Death But His Estate Is
According towards the Probate and Administration Act, the invoices of bankrupt is going to be settled by his estate upon their passing. The household of a bankrupt does not directly inherit your debt.
If the deceased's estate has more assets than liabilities, their estate may be used by the executor to settle his debts. However, if the deceased's estate has more liabilities than assets, the repayment of funeral, testamentary and administration expenses shall have priority. Then, an order of repayment of debts will be distributed according to the schedule Insolvency, Restructuring and Dissolution Act 2021.
If there are insufficient assets, the beneficiaries from the estate won't be liable for the invoices. Chances are that the debts must be wiped off by the creditors.
Do observe that CPF monies from the deceased bankrupt are safe from creditors and will also be distributed directly to the beneficiaries. However, CPF monies which are invested via the CPF Investment Scheme (CPFIS) aren't protected and will also be accustomed to repay creditors.