Family & Joint Debt

Overview

One of the worst things about debt is that it doesn’t just impact you. Debt problems can have serious implications for your family, especially if you aren’t the only one responsible for the debt itself.

In this guide we’ll explore joint debts in detail, including what they are, who is ultimately responsible for repaying them, and what impact joint debt can have on your family.

What happens to debts when you get married?

Your debts should have no impact on your spouse’s credit, and vice versa, unless they are joint debts that you have taken out together.

What are joint debts?

If you have taken out a credit agreement like a mortgage or a bank loan with another person – such as your spouse – then you are carrying a joint debt.

Joint debt is the name given to a debt that two parties are jointly responsible for paying in the eyes of the law. It is most common among married couples, which is why it’s often referred to as matrimonial debt.

Taking on a joint debt means the debt owed isn’t only your responsibility. If you and another person are both named on a credit agreement, then you’re both legally obligated to make repayments.

What are common examples of joint debts?

Most forms of unsecured debt can be taken on as joint debt, from credit cards to council tax and other debts. Below are some of the most common examples.

Mortgage

It’s common for the mortgage on a property to be taken out in joint names, especially if it’s a family home. You and your partner may come to your own arrangement about who pays what, but in the eyes of the law, the debt owed to the mortgage broker is the responsibility of you both.

Credit card debt

It’s common for couples to take on a joint account credit card to pay for shared expenses like shopping, utility bills, or even a shared holiday. If you are joint signatories for the credit card, any credit card debt you subsequently accrue will belong to you both.

Bank loans

It’s understandable if you and a partner have taken on a joint bank loan in order to fund projects you both have an interest in. Joint loans are common for things like home improvements, for example, but even if one person pushed for the project, you will both be legally liable in the event creditors come chasing for payments.

Who is liable to repay joint debts?

Both parties are jointly responsible for any joint debt they take out – this is known as joint and several liability.

Joint and several liability doesn’t mean each person named on a joint debt is responsible for 50% of it. Instead, each person named as a signatory on a joint debt is liable for 100% of the repayments.

While your creditors can’t attempt to collect payments twice, they are within their rights to pursue both of you – or only one of you – for full repayment of the total amount should you default on payment.

Because both parties are responsible for paying, failure to repay a joint debt will have serious financial implications for anyone named on the agreement.

How should I handle outstanding debt with a former partner?

If you carry outstanding debts with a former partner, the bank won’t allow you to separate them, even if you and your partner have gone through a divorce. That’s why it’s important to come to some form of financial settlement.

How to come to a financial settlement with an ex-partner

If you or your partner refuse to make debt payments on a joint credit agreement, it can hurt both of your credit scores and lead to financial problems in the future for each of you. You should try to come to an arrangement with the other party:

  • Agree that you’ll continue making payments from a joint account
  • Discuss an arrangement where one of you pays off the joint loan with a contribution from the other

If the other other party won’t cooperate, you could try enlisting a debt professional to act as a mediator, like a licensed Insolvency Practitioner (IP) – a personal insolvency specialist authorised and regulated by the Insolvency Practitioners Association.

How we helped Paige

It was literally the best decision of my life, and it has actually changed my life, cheesy as that sounds, it has changed my life.

Paige , IVA Customer

What is the difference between joint debt and family debt?

Family debt is a catch-all term for debt that is taken on by a family, whether it’s a loan taken out by parents, or siblings who want to help pay off a debt that another family member carries.

Family debt can be a joint debt, like a mortgage that has been co-signed, but it might also be an individual debt that the family as a whole decides to contribute to. Disagreements over family debt are often handled by a family law solicitor.

As with any other debt, only the person – or people – named on the credit agreement can legally be pursued for payment of a family debt, whether that’s an individual or joint debt.

What if I have joint debt with a business partner?

Partnership

Partners in a traditional business partnership, made up of two or more people, take on joint and several liability for any debts the business accrues. That means each, or both, partners can be held liable for 100% of the total debt.

Limited company

If you’re a director or partner in a limited company registered in England, Wales, and Northern Ireland, you are considered separate from the company itself. That means you don’t have limited legal responsibility for the debts accrued by the business.

failure to repay a joint debt will have serious financial implications for anyone named on the agreement.

What happens if I don't repay a joint debt?

If one party or both people responsible for a joint debt decides not to pay it, there can be serious financial and legal consequences.

Debt collection

Under the law of joint and several liability, if your partner refuses to repay a joint debt, creditors will seek payment from you instead.

After notifying you of the debt, creditors might enlist the help of collection agents in order to recoup the money. If you continually refuse to pay, they may pursue legal action against you and ask the court to order you to repay what you owe.

Credit rating

As well as putting you in a precarious financial position, any unpaid debt – including joint debt – can have a serious impact on your credit rating.

Because you’re both legally responsible for repayment, defaulting on joint debt will negatively impact the credit scores of both individuals involved, which will make it more difficult for both parties to get credit in the future.

Where can I get debt advice on dealing with joint debt?

If you have taken out joint debt in the past but your situation has changed, you may find yourself struggling to come to an agreement with your partner. We can help.

At Your Debt Expert, we offer debt help for all kinds of debt problems, and even specialise in formal debt debt solutions like Individual Voluntary Arrangements (IVAs).

For free advice on dealing with joint debt and help with improving your financial situation, talk to one of our friendly advisers today on 0800 082 8086.

Where can I get more advice on Family & Joint Debt and other debt solutions?

To discuss your options and get the support you need to deal with your debt today, contact us now on 0800 082 8086 or click the button below to get started