Credit is necessary at times in our personal and business life. Often we are so eager to get credit, or sometimes so desperate to get credit that we don’t look at the far reaching consequences. Sometimes we sign jointly with family, friends or business partners and at the time of signing it seems like a good idea.
Remember that you will be jointly responsible for a debt with someone else if both parties signed the credit agreement. In the UK This is called joint and several liability which means you are each responsible for the whole amount of the debt even if you have agreed to something different with one another! It is important so let’s repeat; you are legally both responsible for the whole amount of the debt.
For example, you have agreed with your co-signer to pay half the debt. However, if the person who has agreed to take responsibility for the other half of the debt doesn’t pay the debt the lender can still come chase you for all the money. With this in mind you need to be very circumspect about who you agree to go into debt with!
Should you be jointly responsible for a debt with a civil partner, husband or wife and the relationship is ended you could approach a lender and ask them to let one of you off responsibility for the debt. It will mean, of course, that you and the other person responsible both need to agree to this arrangement. This is helpful where one of the holders of the debt is benefiting more from a financial settlement or has a higher income than the other partner.