Dealing with Joint Debts
Jun 14, 2022 ● 7 min
What is a joint debt?
A joint debt is a credit taken out between you and another person, where you both will have signed an agreement taking full responsibility for paying back this debt. We’ll aim to answer questions about debts you may be responsible for and what support is available to help deal with them.
Credit Card Debt
Contrary to popular belief, it is not possible to be jointly liable for credit card debt in the UK. A credit card requires one primary cardholder, with the option of adding ‘additional cardholders’. Only the primary cardholder is responsible for the debt, regardless of who has spent the money.
It is common for cardholders to add additional names for their spouse or children, but this is not a decision to be taken lightly – the responsibility will always land with you to repay any credit that has been spent. If you have a credit card in your name and are struggling with repayments, we have further advice on dealing with credit card debt.
Joint and Several Liability
This is when two people are responsible for the joint debt, such as when signing a credit agreement or opening up a joint bank account.
When you both sign an agreement, you take responsibility for the entire debt – not just 50% each. This rule applies even if just one person carries out the spending within the account, so you should always be cautious when entering a joint credit agreement and who you agree to enter one with. Even if you keep up your side of the repayments, the lender will still chase you for any money outstanding.
The main exception where you would be responsible for debts that are not directly in your name is if you have agreed to be a ‘guarantor’ for someone else. This means that you will have signed an agreement promising to take responsibility for someone else’s debt if they can no longer keep up repayments.
If you are a guarantor and the creditor has turned to you to reclaim the money owed, then not paying this will impact you along with the initial borrower, so it’s wise to pay this debt as soon as possible. If you can no longer afford the payments, this will negatively affect your credit score, and interest and charges will continue to build on the initial amount borrowed. At this point, it’s advisable to seek professional debt advice.
If you and a partner or friend are dealing with joint debts, you may be able to get these dealt with at once. There are various debt solutions available you can enter both individually and combined. Here’s a summary of what’s available:
Joint Individual Voluntary Arrangement (IVA)
Depending on the debts involved, you can make separate applications for IVAs; if these are both approved, you can join them together. Doing so would make just one monthly payment for 5-6 years. You would also be able to add any other unsecured debts that either of you have taken out individually.
Visit our site for further IVA help.
Joint Debt Management Plan (DMP)
Similar to an IVA, it’s possible to include a joint debt in a DMP with another person. This would consist of you both making repayments together, and you’d both be equally responsible. The main difference is that DMP’s are an informal solution.
It’s important to remember that if one person enters a DMP without the other, then the company will still continue to chase both parties for the money owed.
Visit our site for further Debt Management Plan help.
Joint Bankruptcy is a possible solution for two or more people in a business partnership to enter (where a company becomes insolvent); however, it’s not available for personal debts between you and a friend/spouse. If you wish to become insolvent, you need to make separate Bankruptcy applications, pay individual fees, or enter an alternative solution that allows you to do so.
Visit our site for further Bankruptcy help.
Am I responsible for my partner’s debt?
For many people, having a partner in debt can be as stressful as being in debt themselves.
Many also worry that marrying or moving in with someone who has already built up debts will mean they will become accountable for the money too, but this is another common misconception. Other than the exceptions outlined above, you will only ever be responsible for debts you have taken out yourself or signed together with another person. You would never become liable for someone else’s existing debt. Suppose you want to help the other person with their debt. In that case,n you can always look at various debt solutions available to them, or encourage them to seek free, impartial debt advice from companies such as ourselves.
Getting help with joint debt
If you are seeking further help with your debt, whether joint or individual, it’s always a good time to seek advice. At Money Advice, we can offer a helping hand to you (and your partner, if applicable), helping you find the right solution so that you can start moving on with your lives.