Can I be held accountable for a partner’s debt?

Can I be held accountable for a partner’s debt?

November 3, 2021 by Sandra

The rules governing joint bank accounts may be more confusing than you originally thought. Contrary to popular belief, a joint bank account doesn’t necessarily mean the responsibility of the account is split equally, and so a partner within the bank account doesn’t necessarily mean a partner for the debt or overdrafts incurred. 

As such, the debt created from joint bank accounts and who is held liable is becoming an increasingly problematic situation. So, if you find yourself wondering, ‘can I be liable for my partner’s debt?’, read on to find out more...

Can I be liable for my partner’s debt?

What would you do if you found out your partner had taken the money from an overdraft and left you solely responsible for the entire debt? This situation is becoming more common than you would imagine, with many divorces noting husbands and wives opening joint accounts, creating overdrafts and leaving the other account holder responsible. 

The trouble with joint accounts

So, what’s going on? The problem with many bank accounts is that often people in the UK do not completely understand how they actually work. Joint accounts are a bit of a misunderstood subject in UK law, with both partners being ‘jointly and severally’ liable for any debts. To put it simply, this means if one partner runs up a large debt and isn’t willing or able to pay it off, you will be liable for your partner’s debt. 

What’s more, these rules and regulations surrounding joint accounts are not always made clear to all parties when they sign up. For starters, the terms and conditions of joint accounts can run into over 40 pages of small print. Another problem is that it is not necessary for both account holders to agree to larger proportions of debt - which means that as a member of a joint account, the bank does not have to tell you if your partner has increased the overall debts associated with that account. 

To take a recent example, Jo, a divorcee from London, found out that her then partner had created an overdraft and taken £2,700 just before the divorce. Despite informing her bank, there was little they could do as he refused to pay the money owed, and she wound up being responsible for her partner’s debt.

So, what solutions are available?

Many people come to McAlister & Co for advice about whether they are liable for a partner’s debt and how to handle debts built up by their partners - and the good news is that there are a wealth of options available. Our top five tips for those struggling with debt are as follows:

Prioritise

First things first, if you are struggling financially because of a partner’s debt and don’t know what to do, it’s important to begin by working out which debts need to be paid first as some will be more pressing than others. For example, you should always tackle debts with higher rates of interest first as these could lead to significant problems if they remain unpaid.

Debt Management Plan

If you are struggling with credit cards, overdrafts or loans, a debt management plan (DMP) can help you make reduced payments over a set period of time. As personal insolvency experts, McAlister & Co will deal with your creditors on your behalf and arrange a bespoke plan based on what you can afford, not what you owe. Find out more here.

Debt Relief Order

If you need to make a fresh start financially but have very little income and no assets, a debt relief order (DRO) could be the right option for you. Sometimes known as a mini-bankruptcy, DROs were introduced for those with little or no assets and limited disposable income. They typically last for 12 months and have a fee of just £90. Find out more here. 

Individual Voluntary Arrangement

If you owe more than £15,000, an Individual Voluntary Arrangement (IVA) is a legally binding agreement that protects you from legal action by creditors. When you enter an IVA, a repayment plan will be drawn up based on what you can afford, and after the set period (typically five years), any remaining debt is written off. Find out more here. 

Bankruptcy

If you have a large amount of debt that you need to write off, bankruptcy enables you to do so - but it’s important to remember that bankruptcy is a very serious procedure that shouldn’t be taken lightly. With bankruptcy, you will usually be released from restriction after 12 months, meaning you can make a fresh start without the debt. Find out more here. 

How McAlister & Co can help

We hope that answers the question ‘can I be liable for my partner’s debt?’. If you are struggling with debt, especially if it is because of someone else, it can be a very difficult time - which is why we are here to help you every step of the way.

At McAlister & Co, we are personal insolvency experts and can advise you on everything from debt management plans to bankruptcy - so don’t suffer in silence. Reach out to our experts today and take the first steps towards your debt-free future. 

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