Joint and Several Liability
If you have taken out a credit agreement, such as a loan or bank account in joint names (with another person) then you are both liable for the full amount of any debt.
If you have a joint loan with a spouse or partner and one of you fails to repay the debt (as often happens following divorce or separation) then the lender could still ask you for payment of the full amount (not just half).
The lender cannot recover the money twice but can pursue both of you, or just one of you, for all amounts still outstanding until they have obtained full payment.
Joint and several liability can also apply to rent arrears on joint tenancies, arrears on joint mortgages, Council Tax payments and water charges on properties that have been jointly occupied.
What is several liability?
Several liability means that each party is liable for only for its own specified obligations, so if the debt is in your sole name, then you are solely responsible and no one else can be pursued for payment. For a joint debt two people enter into a credit agreement, the debt is therefore in joint names and they are then both liable for the full amount of any debt relating to that credit agreement.
I did not sign any agreement, what can I do?
For an agreement to be joint and several then it must be signed by all parties (except for Council Tax). If a lender says you are jointly liable for a debt and you believe this is not the case, it may be worth asking for a copy of the original agreement. If you have not signed it then you are not liable.
However please note that where credit cards are not taken in joint names, even if you have two cards, then only one cardholder is considered the account holder. They will be responsible for full repayment for the debt, regardless of which card was used.
What are my legal rights?
If you have a joint debt and one of you fails to repay the debt, the lender will ask the other for payment of the full amount. They could also take legal action against you for the recovery of the full amount.
How does marriage affect debt?
Any debts which have been taken out prior to the marriage in sole names are purely the responsibility of the one person.
Your credit history won’t appear on your partner’s credit report and your credit rating will not be affected by your marriage. Any debts taken out in joint names during the marriage are the responsibility of both parties and if one party has bad credit, then their poor credit rating may affect the joint application.
Am I responsible for my deceased partner’s debt?
If the debts are in the deceased partner’s sole name, then you are not responsible to pay the debts, but if there is any equity in the estate, then the creditors may put a claim against the estate for repayment of the debt. If you were a guarantor for the debt, then the creditors are able to pursue you for the outstanding debt.
Am I responsible for my deceased family members debt?
If you were a guarantor for the debt, then the creditors are able to pursue you for the outstanding debt. If the debt was in the family member’s sole name, then creditors cannot pursue a third party for payment.
How do I tell my partner or family member I’m in debt?
It is difficult to summon up the courage to discuss your debts with your partner, but it is better that they hear it from you, rather than them answering the door to a bailiff.
People often feel ashamed of being in debt and worry that this will drive a wedge between both parties, but once discussed, then you can both work together towards getting things sorted.
Realising that you have debts that you cannot pay is the first big hurdle, once it is out in the open it can be a weight off your shoulders. It is difficult to continue juggling repayments to creditors while trying to pay household bills and this can put a severe strain on the marriage. Better if both parties are aware of debts and can work together to a reasonable repayment solution.
Discuss the situation with your partner and try to map out a financial plan for the next couple of years. Try not to accumulate more debt and live within your means without relying on credit to survive.
Been left with massive debts? Your rights
You should take advice, there may be several repayment options open to you, but you should have your circumstances, income, expenditure etc taken and a realistic budget drawn up to see how much you would be able to repay to your creditors without pushing you into further financial difficulty. Different debts require different solutions, mortgage and rent are priority debts, whereas credit cards and personal loans are unsecured.
How can I help my partner or family member who is in debt?
First, you should talk to them to try to get an overall picture of their debts. Are there any court papers, threatening letters etc? Try to get as much information/paperwork as possible then contact either Payplan or one of the other free advice companies while you are with the person so their authority to discuss their debts with yourself can be given.
Joint debt, help and debt solutions available
Joint debt can be included in any debt management solution including Debt Management Plans and IVAs. Debt management plans can be either in sole names or joint names, so if there are joint debts then a joint plan may be a good option. Creditors will then be contacted on behalf of both parties and a suitable repayment plan made.