Will debt management affect my spouse?

16 February2021

Many couples assume that - because their finances are largely separate - when one partner starts a debt management plan it won't have an impact on the other. Although it's true that you can join a debt management plan on an individual basis, it could still have an effect on your partner too.

Because a debt management plan asks your lenders to accept a change to the original agreement, they could issue a default notice against you, which will appear on your credit file. Your credit file 'connects' the names of any individuals in your household so it could affect your partner's ability to get credit in the future: A potential lender might assume that your debt problem is shared, even if your partner isn't in financial difficulties themselves.

This is particularly true if you have any joint credit arrangements such as mortgages and loans or hold a joint bank account. However, if your only link is a shared address you can provide the credit reference agencies with a 'notice of disassociation' explaining that your finances are entirely separate.

Could my partner's income affect my debt management plan?

Although your partner's financial situation will be taken into consideration when your debt management payments are calculated, they won't be expected to contribute to your debt repayments.

When a debt adviser reviews your household's monthly incomings and outgoings they'll look at both of your incomes and expenditure so they can divide the remaining disposable income fairly between you. Although yours will go towards your debt management repayments, your partner is free to use theirs as normal.

Can we still apply for joint credit?

It is better not to apply for any joint credit, as your lenders will expect you to be paying as much as you possibly can towards your debts each month. As such they may not want to continue with a debt management plan if it emerges that you are borrowing more money.

Furthermore, your credit rating will have been affected by your debt management plan, and a refusal could further affect both you and your partner's credit rating in the future. If it is possible to keep your finances separate and avoid any joint credit, overdraft or bank accounts it will protect your partner's credit history whilst you repay your debt.

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Tags: debt management, credit rating, joint credit, loans, mortgages, debt, debt management plan, partner, spouse, husband, wife

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