If I Separate From My Partner, Am I Responsible For Their Debt?
Separation or divorce from a partner or spouse is an extremely traumatic experience
. But if debts are involved the process of how these are dealt with needs to be understood.
As a general rule, a person cannot become liable for debts taken out by another individual unless the debt was signed for in joint names.
If you take out a credit card in your name and you make your partner or spouse a second card holder they could then spend the entire card limit. However they are not responsible for paying back any of the money. You as the named account holder are responsible.
It is possible that you have taken out a personal loan in your name on behalf of your partner. The money is then used entirely for your partner's benefit, perhaps to pay for improvements to their property.
Despite all of the money being spent for your partner's benefit, you as the individual who borrowed the money and who is named on the loan account remain liable for repaying the entire debt.
Relationship break down
This arrangement can work very well while a relationship remains intact. It is more than likely that both parties are working together and contributing to the repayment of the debt.
However, if the relationship subsequently breaks down and your ex no longer contributes towards the repayment, as the person who actually borrowed the money, you will have to continue to maintain the payments yourself and repay all of the outstanding debt.
There is generally very little you can do if this situation occurs.
The only way to try and secure help for the repayment of a debt incurred in this way is to try to make a claim against your ex partner in court.
However, this would be an expensive process with probably little chance of success.
In the mean time, you have to continue making the debt repayments. If you do not, it is likely that the account will fall into default. The creditor will take action against you for the collection of the money.
Importantly, your credit rating will be damaged making it difficult for you to get more credit for example a mortgage in the future.
Can you protect yourself?
It is not easy to protect yourself from being left with the responsibility for repaying debt incurred while in a relationship.
One thing you could do is ensure that debt taken out for the benefit of you both is borrowed in joint names. However, this is not always possible if one party already has a poor credit rating or does not have enough income to support the loan application.
Even if you do borrow in joint names, this does not really protect you after a relationship break down.
If you split from your partner, you both remain jointly liable for 100% of the debt. The bank will continue to chase you individually until 100% of the debt is repaid.
It is not uncommon for people to find themselves in a situation where they have been left with debt because of a relationship breakdown.
If you find yourself in this position, you should take advice as soon as possible. Very often if you continue to struggle to make ends meet you will end up robbing Peter to pay Paul - borrowing from one creditor to pay another.
This will normally just make to situation worse.
by: Steve Jackson
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