‘Joint and Several’ Liability: Who’s Responsible For Debt?
Written by PayPlan on 13 August 2018A joint and several liability agreement can apply to mortgages, tenancy agreements, council tax and water bills in jointly-occupied housing, as well as unsecured credit like personal loans. Below, we answer some of the most commonly-asked questions on the subject.
Taking out a bank account, loan or credit card with someone else, normally your partner, is a good way to manage household budgets. But things can quickly turn sour if one party falls into financial difficulties and/or the relationship breaks down.
While you may think you’re only liable for half the debt, a lender can still pursue you and/or the other person for the full amount. If your partner dies, then you must also pay off the remaining balance yourself, although if you inherit money, you can use a lump sum to pay off debt.
What is a joint and several liability agreement?Joint and several liability simply means that everyone who signs a contract – whether it’s a couple with a debit card or a group of friends in a house-share – is responsible for the debt, even if one person can’t or won’t pay. The debt is in both your names, and if you don’t keep up the repayments, you’ll be liable for interest and charges. It is also likely to affect your credit rating.
Remember that if you add another person on a credit card in your name only, then you are solely responsible for the repayments, even if the other party spent the money. This is why you should be careful who you add, and always check they are able to pay back what they owe.
What are my legal rights?In cases where one person fails to repay the debt, the lender can pursue you for the whole amount, and could take legal action if you don’t settle the bill.
How does marriage affect debt?Legally, there is no difference between married and unmarried couples’ debts. Loans, mortgages and bank cards in one person’s name remain their responsibility, unless they add their spouse and make it a joint account.
If you have joint accounts or debts with a partner, then you may be financially linked, meaning that lenders may see your partners credit file too. If you are no longer linked, then you need to contact the credit reference agencies and apply for financial disassociation.
Am I responsible for my partner’s debt after they die?You’re not personally liable for your partner’s debts, but you are responsible for joint ones after death. Be aware, however, that creditors can take what is owed from the deceased person’s estate. If you were a guarantor for the person who has died, lenders can also pursue you for the outstanding debt.
Am I responsible for my deceased family member’s debt?Again, you’re only responsible if you were a guarantor and/or had any joint agreements. Creditors cannot chase you if the debt was only in another person’s name, but they can make a claim against the estate.
How do I tell my partner or family member I’m in debt?While it’s always difficult to raise the subject with someone you’re close to, it saves a lot of heartache in the long run, especially if bailiffs are involved.
Admitting you had unmanageable debts is the biggest hurdle, but once you have a plan in place to pay them down, you’ll feel like a huge weight has been lifted from your shoulders. Depending on your circumstances, a partner or family member can provide practical advice, support you emotionally and make sure you stick to a strict budget.
Have you been landed with unmanageable debts?Always seek professional advice, from a personal finance expert like PayPlan and, in some cases, a solicitor. if you find yourself with unmanageable debts our advisers will help you decide which debt solution will work best for your circumstances.
How can I help my partner or family member who is in debt?Sometimes our loved ones need a helping hand to tackle their debts, especially if they are distressed about the situation. Ask them to be honest about the amount they owe and whether they have received any letters from the court. As long as they are comfortable with it, and present to give authority, you can contact us on their behalf to discuss their options.
Solutions for joint debtsPayPlan can look to help you with joint debts that you are struggling with. We have a range of debt solution options that we can recommend if you are eligible.
To access PayPlan’s free debt support, contact us online or call 0808 250 5907.
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