Liability for debt is a topic that affects millions of people in the UK, and it’s essential to understand who is responsible for repaying debts, especially when it comes to joint debts.
Joint debts are debts that two or more people have taken out together, making them equally liable for the repayments. Failing to repay debts can have severe consequences, including lasting damage to your credit rating.
Who is liable for my debt?
You cannot be asked to pay for a debt that you are not linked to or liable for in any way, and a court cannot order you to take liability for someone else’s debt.
However, there are some ways in which someone else’s inability to pay their debt could impact you and your household. A couple of examples are:
- If someone gifted you money or property and was later made bankrupt, there is a possibility that you will be asked to return the gift to allow it to be paid into their bankruptcy agreement
- If bailiffs are used to recover your housemate or partner’s debt, jointly owned goods could be affected
- If a credit card is in your name but you let your partner use it or added them as an additional cardholder, the liability for the debt is entirely yours, as you gave them permission to use it
- If you are living in a property where your partner is the named account holder on the utility bills, you may become liable for the debt if your partner leaves the property
If your debts are passed to a debt collection agency, you will still be liable to pay them. You may need to contact the collection agency to come to a suitable arrangement over how to make repayments.
How much debt do you have?
What is joint debt?
Joint debt refers to a type of debt that is taken out by two or more individuals.
When individuals take out joint debt, they are equally liable for repaying the debt under something called ‘joint and several liability’. This means that each person is responsible for the entire debt, not just half of it.
In the event payment isn’t made, the creditor (the person you owe money to) can pursue any one of the parties for the outstanding balance.
Common forms of joint debt
There are several forms of joint debt that can cause problems for people down the line.
When two or more people take out a joint credit agreement together, they are joint and severally liable for making payments.
If one person is unable to contribute to the repayments, the others are still liable for the full amount. Here are some of the most common examples of joint debts where joint and several liability can apply:
- Mortgage
- Personal loan
- Bank account
- Overdraft
- Rent
- Household bills (e.g. electricity, gas, and water bills)
In the UK, there is no such thing as a joint credit card. Even if an additional user is added to an account, the primary cardholder remains solely responsible for the debt.
Who owns the debt liability for joint debts?
As previously mentioned, the ownership of a joint debt is shared equally among all parties. This means that each person is responsible for the full amount owed, not just a portion of it, under joint and several liability.
For example, if two people take out a joint loan and someone stops making their repayments, the creditor can pursue either person for the entire debt amount owed.
This puts all parties at risk, so it’s important to understand the potential consequences of joint and several liability before entering into a joint credit agreement with anyone, even a close friend or family member.
to debt advice?
- Skip the queue for help
- You take control
- Expert-matched advice
Fast Track only speeds up access to debt advice—it doesn’t affect approval times or outcomes of any debt solution. Fast Track applies during regular business hours, otherwise advisors can offer personalised advice from 8am the next day. T&Cs apply.
How long will I be held liable for my debt?
In the UK, there is a limitation period for collecting a debt, which is a time period within which legal action can be taken against you. After the limitation period expires, the debt becomes stature barred (legally unenforceable).
However, it’s important to note that creditors can still take non-legal forms of recovery action to recover statute barred debts. For example, while they can’t use enforcement agents (bailiffs), they can still pass the debt to a collection agency.
Here are the various limitation periods for different types of debt:
Unsecured debts
In England and Wales, unsecured debts, such as loans, credit cards, and catalogue debts, typically have a limitation period of six years. This means that the creditor has six years from the date of the last payment or acknowledgement of the debt to take legal action against you for the outstanding amount.
In Scotland, the limitation period (known as the prescription period) is typically five years for unsecured debts.
Mortgages
For mortgages in England and Wales, the limitation period is 12 years for the capital amount and six years for the additional interest. In Scotland, the prescription period is 20 years for the capital amount and five years for the interest accrued.
Creditors have a longer period of time to take legal action against mortgage arrears because it is a secured debt.
Council tax
Council tax works a bit differently from other debts, as it can technically be pursued indefinitely regardless of where in the UK you are located.
This means that your local council can continue to chase you for a council tax bill regardless of how long ago they were incurred.
It’s important to note that these limitation periods can vary depending on the specific circumstances of your debt and your location, so it’s always best to seek professional debt help if you’re unsure about your liability for a particular debt.
How long am I liable for debts that are subject to court action?
If a creditor has filed court papers against you or you have a County Court Judgment (CCJ) registered against you, there is no time limit on the debt. In other words, legal action cancels out any limitation period or prescription on a debt.
This means that the debt is still outstanding and you must pay it to avoid any further legal action. If the debt is in dispute, it remains payable until otherwise agreed, whether by court order or by the company agreeing to waive the debt.
Can I be held responsible for my partner’s debts if we’re married?
It’s a common misconception that your partner’s debts automatically become yours too if you get married. However, your partner’s creditors can’t take your own funds to repay their debts or seize your belongings or money to make up for their missed payments.
The only situations in which you can be held personally liable for your partner’s debt is if the debt was in joint names or you co-signed as a guarantor. In these cases, the creditor will chase you for the whole amount owed if it’s clear that payment won’t be made by the original borrower.
In short, if the debt is in your partner’s sole name and their name alone, you’re not liable to pay it, even if you’re married.
Can I lose money because of my spouse’s debt?
Generally speaking, no. However, if the debt has escalated to the point where a creditor has started to seize your partner’s assets to recover money, this might include their share of the home they share with you.
For example, a creditor might put a charging order on your marital home. This shouldn’t have an immediate impact on you and doesn’t necessarily mean you’ll lose your home, but the creditor might apply for an order to sell if the debt remains unpaid and this will directly affect you.
If your spouse is facing legal action as a result of unpaid debt, it’s important to be aware of the potential impact of a charging order on you and your jointly-owned home.
“No fuss, just simple, honest advice. Communication is good and they make the process as easy as they can.”
Am I still liable to pay a debt if I have Payment Protection Insurance?
Payment Protection Insurance (PPI) is a type of insurance designed to cover your monthly debt repayments in the event you are unable to work due to something out of your control, such as an accident, sickness, or unexpected unemployment.
Therefore, if you have PPI and you are unable to pay your debts, your payments may be covered for a set period.
However, it’s important to note that having PPI doesn’t automatically remove your responsibility to repay your debt and you are still liable for the outstanding amount. PPI is simply intended to provide you with temporary financial support during a period of short-term hardship.
The exact terms and conditions of the PPI policy will depend on the specific policy and provider, so it’s important to read all your documents carefully and understand what is covered and what is not.
If you have concerns about your ability to make repayments on your debts, it’s important to contact your lender as soon as possible to discuss your options.
Can I remove my name from a joint debt?
If you’re no longer associated with a person you took out a joint credit agreement with, you might be wondering if you can remove your financial link to them. This often happens when two people break up and one person no longer wants anything to do with their ex-partner’s debts.
Thankfully, there is a way to unlink yourself from someone financially. This is known as a ‘financial disassociation’.
Firstly, you must close the joint account and provide proof of the inactive account as you can’t disassociate yourself from a joint debt if the account is still active.
Then, you must contact the relevant credit reference agencies and request that they remove the financial link. The process works differently depending on the credit reference agency, but you’ll likely need to either fill out an online form, send an email, or raise a dispute.
The credit reference agency will then investigate the claim and remove any connection from your credit report if they deem it acceptable to do so. This should sever any financial link you have to the person and prevent their financial difficulties from harming your credit score and preventing you from obtaining most forms of credit, including a loan or a mobile phone contract.
Contrary to popular belief, paying child maintenance doesn’t automatically create a financial association between you and your ex-partner.
Debt help tailored to you
From writing off a large portion of your debt, to readjusting your budget, we’ll find a solution that suits you.
Do I have to repay money owed to loan sharks?
In the UK, loan sharking is illegal and considered a criminal offence under the Consumer Credit Act (1974). Therefore, borrowers who have taken out loans from loan sharks do not have a legal obligation to repay the debt.
However, despite this, it is still important to address the issue as soon as possible. Loan sharks often use illegal and intimidating tactics to collect repayments, which can put borrowers at risk of harm or violence, especially if they are vulnerable.
If you have borrowed from a loan shark in the UK, you should seek help and support from a reputable debt advice agency. They can provide you with advice on your rights and options and help you to report the loan shark to the appropriate authorities.
Conclusion
If you have a joint debt (e.g. a joint bank account, mortgage, or personal loan), both parties have joint liability for repayment of the outstanding debt. This means that you could be chased for payment of a debt you took out with your partner if they don’t pay.
Generally, if a debt is in one person’s name, only that person is liable for repayment of the debt.
It’s important to be aware of how someone else’s debt could potentially impact your own financial situation and even your living situation.
