Can my partner’s debt affect me?

May 11, 2018

One of the most common worries that people face when thinking about their finances is whether being in a relationship with someone who has high levels of debt or a poor credit score will affect them? The answer mainly lies in whether or not you and your partner are ‘financially linked’ together or not.

How can two people be ‘financially linked’?

Contrary to popular belief simply being married to or in a civil partnership with someone, or living at the same address as them, does not mean that your credit records are linked. The only way that a potential lender would consider your partner’s credit history along with yours is if you are applying for a joint product, such as a joint bank account with an overdraft, a joint mortgage or a joint loan.

Can I be held liable for my partner’s debts?

In most cases the answer to this is no. However if you have taken out any credit that is joint with your partner you can be held solely liable if the creditor is not able to recover the debt from your partner. This is known as being held ‘jointly and severally’ for the debt.

The other circumstance in which you could be held liable for your partner’s debt is if you have signed a personal guarantee for a loan that they are taking out. This means that the creditor is legally able to recover the debt from you if your partner defaults on the loan.

Can my partner’s bad credit score affect me?

Again in most cases the answer is no. Just because your partner has bad credit (even if you are married or live at the same address) this shouldn’t affect you if you are applying for credit solely in your name. However there have been some cases where a creditor has checked the credit history of someone that you are financially linked to and used this as justification for turning down credit or offering less favourable terms.

What about joint credit cards?

In actual fact there is no such thing as a joint credit card. Credit cards will only be issued in one person’s name, but another person may have an additional card to allow them to spend on that account. However in this case it is the main account holder who will be held solely liable for the debt, regardless of who has contributed to it.

What about mortgages?

Again the crucial distinction is in whether the mortgage has been taken out solely in your name or in joint names? If it is a joint mortgage, or solely in your name, you will continue to be liable for making repayments even if you have moved out of the property. Whereas if the mortgage is in your partner’s name you won’t be liable for payments but could be at risk of eviction if your partner does not keep up the repayments on the debt.

However in some cases the mortgage lender may argue that you have a ‘beneficial interest’ in the property. This could be based on the fact that you have contributed financially to its upkeep or household bills on a regular basis. In this case the courts could rule that you have a legal obligation towards servicing the loan, but the extent to which can be quite variable.

What if my partner and I split up?

If your relationship with your partner ends you can contact the three UK credit reference agencies (Experian, Equifax and Callcredit) and ask for a ‘Notice of Disassociation’ to be added to your credit record which will break any financial links between the two of you. However this will only be granted if you no longer have any outstanding joint debts (even if you are in the process of paying them off and have no defaults etc.)

For personalised advice about resolving your partner’s bad debt contact the team at Northern Ireland Debt Solutions on 0800 470 0461. We can either talk through your options on the phone or arrange a free same day meeting to find out more about your situation before advising you on the best way to help you out of debt.

Lawrence O'Hara

Insolvency Adviser

Tel: 028 2132 6269

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