Am I liable for my partner’s debt?

Liability for a partner’s debt depends on whether the borrowing is in joint names or your partner’s sole name. In essence, if the debt is in their sole name you cannot be held liable unless you have acted as guarantor when the loan was taken out.

Acting as guarantor for your partner means making a personal guarantee that you will meet loan repayments should they fall behind. If you are a guarantor for any of your partner’s borrowing, the creditor will look to you for payment should they be unable to recover the money from your partner.

What is joint liability?

In the case of loans with joint names, you will be held ‘jointly and severally’ liable for the debt. This means that if your partner is unable to afford the loan repayments at some point, the full outstanding amount will be your responsibility.

Being jointly and severally liable applies to bank overdrafts as well as personal loans. If the account is held in joint names, there is no escaping your responsibility should your partner be unable to make repayments.

If the mortgage is in your partner’s sole name:

When considering arrears on a mortgage in your partner’s sole name, you will not be liable for the debt but may face eviction by the lender should they attempt to recover their money by repossessing the property.

Further consideration has to be given to the fact that a creditor may make a claim regarding your ‘beneficial interest’ in a property. This could happen if you have contributed financially to its upkeep or household bills on a regular basis.

The length of time it takes to build up ‘beneficial interest’ in a property is complex, however, and each case is viewed differently by the courts.

What is the liability for rental agreements?

Joint rental agreements work in much the same way as a mortgage, in that you are responsible for the entire amount of rental outstanding and could be evicted by the landlord in an attempt to control their losses.

Can my credit rating be damaged?

If you have any history of joint borrowing with your partner, their debts could adversely affect your credit rating simply by association. You can contact the main credit reference agencies to request ‘financial disassociation’ if there is no outstanding joint borrowing, and you no longer reside at the same address.

It is important to contact your utility companies and local council if you have moved out of a property previously shared with your partner, as you may be held responsible for paying these bills if they are not informed.

Responsibility for joint debt secured on an asset can be a complex area. Get professional advice from Scotland Debt Solutions – we will help you understand your financial situation and responsibilities.