Should I tell my fiancée that I am an ex bankrupt?

One day last week my phone went off, it was an old client of mine called Steve: "Mike. I'm in love, due to get married, got a problem though". Muttering back something about being no agony aunt, Steve went on: he wanted to know if he should tell his fiancée that he had gone bankrupt 10 years ago. "Mmmm... do you think you need to?" I asked. Silence.

Steve came to me for debt advice many years ago after he had lost his job. No income and with credit card and personal loan debts of around £40,000 he had no other option.

Bankruptcy worked well for him, he cleared his debts and was now back in full time employment. His immediate problem was that he felt a failure and now thinks that the new girl in his life will think the same about his bankruptcy and dump him!

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 any one of us. I remind them that the last debtors' prison shut 141 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 contribute to society.

Should he come clean?

So should Steve mention his bankruptcy? It's a difficult call as a lot depends on individual circumstances. In this particular case I would spill the beans and be upfront.

If your fiancée cannot accept what happened before you met, especially after you have been honest and open about your past, then you have to question the strength of the relationship. If a partner dumps you because you were once made bankrupt then I would take that as an early indicator to get the hell out of the relationship.

Will his fiancée 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 Steve and his partner.

In Steve's case as the bankruptcy was 10 years ago it would not be on his credit file but in other cases bankruptcy would be on the file if it occurred under six years ago.

Anyone with a checkered credit history is usually asked to make a down–payment of a bond for between three to six months when renting a home. This means that if the rent is £800 per month then the deposit in advance would need to be between £2,400 and £4,800.

The matter is more complicated if applying for a mortgage. If after being granted the mortgage and it transpires that Steve had hidden the fact that he was a previous bankrupt, (there is usually a direct question asking if any of the applicants have ever been made insolvent in the past,) then clearly he has committed fraud.

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

In these days of pre–nup agreements, it's not surprising to hear of individuals snooping around to see what's on offer. More surprising – and alarming – 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 so long as I have their name, and they would not even know I had done it.

More about

Your Comments

I know exactly how Steve feels, bankruptcy is something that is getting more and more common as people struggle with tough times. I wasn't proud that I went bankrupt over 6 years ago, in fact in many ways I put my life on hold. Getting a bank account was difficult but I have found that the Co-op bank are really don't feel like a second class citizen with them!
I was discharged from my bankruptcy after one year but people unfortunately think everything goes back to normal which it certainly doesn't. Debits and the details stay on your credit report for 6 years. As soon as my 6 years (last October) were complete I checked all my credit reports and found that 2 debits were still showing. I called my creditors and within 5 days they were removed. I now have a very good credit score and took the advice given to me and applied and was accepted for a credit card to so I can improve my credit score further.
Unlike Steve when I met my partner I told him of my bankruptcy and he was fine about it...however I do have a question which I hope you can help clarifying for me as I have heard different things and it's made me panic rather!
We are going to rent a property together and the landlord will run a credit check on both of us.....It's been over 6 years and whilst my credit report shows I have no debts (a good score) will there be any information that shows I was a bankrupt?

The record of your bankruptcy should not be on your file six years from the date the bankruptcy order was made.
I expect the credit check on you will be to a minimum; however there may be a question on the application form for the rental agreement. ‘Have you ever been made bankrupt or entered into an arrangement with your creditors?'
This annoys me because you have served your time (6 years) and I do not see bankruptcy as a criminal offence. It is a legal way of discharging your debts.
It will be your call as to whether you answer this question honestly but if you didn't then I know where you are coming from and you would not be the first to do it. 
With a mortgage application, including insurance you will be asked the same question, this is different in that you could be seen to be committing fraud if you fail to mention the bankruptcy, it could also make any potential insurance claim invalid. 
I do not see the same for the rental bit. If I was the landlord all I would look for is your ability to repay, current income etc. Most bankrupts tend to manage their finances a lot better after suffering the stress and trauma of their earlier years so in my book you should be a good candidate for any landlord.
The way previous bankrupts, or should we say, financially challenged, are treated in the UK is beyond belief.