Impact of partners debts

Debt is the responsibility of the person or persons who entered into the agreement. However, life is never that simple.

The impact of debt goes beyond the financial. Many relationships can be severely strained by either hidden debt (e.g. through excessive spending or gambling) that is finally uncovered. Up to 20% of the general public will hide debts from their partners and some may try to borrow money after separation for which their former partners could be liable. Years of harmonious and happy living can be torn apart by the consequences of managing the process back to solvency.

Most people enter major items of borrowing (such as a mortgage for their home) in joint names. Here, each person is jointly and severally responsible for the full amount owed and a creditor can pursue either or both for repayment in the event of default. This can also be the case for other items of borrowing such as car loans, bank accounts or property rental agreements.

Where agreements are entered into by one person only, then theirs is the obligation and the responsibility. However, the other, or non responsible, partner may feel partly at fault, obliged or morally obliged to help out by seeking additional work to earn more income to help pay off the debt. This can lead to recrimination, bad will and stress in the relationship.

Once debt of any kind starts to get out of control in any relationship then it impacts both parties. Agreeing any form of debt management programme, Individual Voluntary Arrangement (IVA) or Deed of Trust or Bankruptcy has a significant impact on the amount of disposable income for the household. Any free equity (the value of the house less any borrowings) will also have to be taken into account and released, through remortgage if possible, to help pay off the debt. Where only one person has the debt, the free equity will be assessed in proportion but in the worst case, may result in the home being sold.

Once there are debt problems, these will start to flag up on the credit file and impact the credit score for the person or persons. Either way, the address will show payment problems and the credit score of anyone in the house may be adversely affected. This will make it more difficult to obtain credit or services (such as mobile phone contracts) on competitive terms.

Divorcees are not necessarily clear of former partner's debts. Any assets awarded as part of the settlement can be reviewed for up to 5 years after the divorce if one of them should be declared bankrupt. Hence, you must seek professional legal advice if there is any prospect of bankruptcy being possible in the foreseeable future.

Debt and dealing with its consequences can have a serious impact on the nature of relationships. Please browse our site for advice, information on debt, help with personal relationships can be sought from Relate, the relationship people at www.relate.org.uk or at any of their many local offices.