Joint Debt


Joint Debt

It is not uncommon for two people to sign up jointly for loans and accept joint financial responsibility particularly for large personal loans or mortgages. Often, it is far more convenient to set up a joint bank account when you move in with a partner, and to take on a joint mortgage when the time comes to buy a home together, but:

  • the arrival of a child might lead to a joint income becoming a sole income, which may well put strain on the household’s ability to service its borrowings

  • If there’s a breakdown in the relationship, then joint debts can become far more complex and difficult to deal with, especially if the joint income that you both used to enjoy is now being split to cover two sets of household expenses.

You might need help to work out how to deal with these sudden changes in financial health, so seeking support from a local budget adviser when you are not in too deep may well be the best option, but if the debt is just not going to be possible to service, then you need to get in touch with us at Debtfix.

DFX Line Icon Set Red 013-01.png
Joint Debt - Debtfix - NZ

What you need to know

If one party fails to make debt payments during or after a divorce, the other party may become solely liable for that debt. It’s a common myth that one party is only responsible for only half of a joint debt.

What can I do if I didn’t agree to sign up to an agreement?

If you’re being chased for debts that you don’t recognise, the first thing to do is ask the creditor for the original paperwork. If you didn’t sign up for the agreement, you may have been a victim of fraud. 

How does marriage affect debts?

All debts and obligations taken out in a sole name prior to marriage remain the responsibility of the person named on the agreement. Even after marriage, if one party takes out a sole debt, it is their responsibility. Your credit report will not be merged with your spouse’s upon marriage but if one party has bad credit, this may affect the other person’s credit score.

What happens to the debts of a deceased partner?

If the debt is solely in the name of the deceased, then it is not your responsibility to pay it back. However, if there is equity in any property jointly held, the creditors may put a claim on the deceased party’s share of the property for repayment of the debt. If you and your partner owned 20% equity in your home, creditors may attempt to claim your deceased partner’s 10% to cover the outstanding debts.

What happens to the debts of a deceased family member?

In this instance, if you were a guarantor for the debt in question, the creditors will be able to pursue you for the outstanding debts. However, if the debts were only in the name of the deceased family member the creditors will not be able to chase you for the debts.

How can I tell my family and loved ones about my debt problems?

People often feel ashamed or embarrassed and find it hard to let their loved ones know about their debts. We advise our customers that this news is much better coming from you, than your family finding out from a bailiff visit.

Family members can often help you to organise and plan how to resolve your debt issues. This will help to relieve the stress on you and could prevent strain or tension arising in your relationships with partners or family members.

How can I help a partner or family member who is in debt?

Debt is a common issue across the whole of New Zealand and there is no reason for people to feel ashamed or embarrassed. This is something you must stress to your loved ones. They must know that they do not need to face debt alone.

If your loved one is unaware of how severe their debt issues are, collect all the information you can and do your best to help them understand it.