It is perfectly normal for couples or business partners to take out loans or overdrafts in their joint names, in the expectation that each of the individuals will be responsible for their share of the debt repayments over the agreed repayment period. All's well as long as repayments are kept up to date, and partnership relationships remain on a happy note.
Well, there's the perfect world, and generally this works very nicely.
However, there are occasions when, for whatever reason, a partnership fails; marriages break up, business partners fall out, or finances become stretched, it becomes hard to maintain repayments and the money problems begin.
And this is when things start to get a little difficult!
If you have taken out a credit agreement, loan or have a bank account in joint names (with another person) then you are both liable for the full amount of any debt. This is known as 'joint and several liability', and is a common term of credit agreements.
This means that where you have a joint loan with a spouse or partner, and one of you fails to repay the debt (which often happens following divorce or separation) the lender is within his rights to require you to cover payment of the full amount (not just your half).
The lender cannot recover the money twice but can pursue both of you, or just one of you, for all amounts still outstanding until they have obtained full payment.
Joint and several liability can also apply to rent arrears on joint tenancies, arrears on joint mortgages, Council Tax payments and water charges on properties that have been jointly occupied.
What if I did not sign any agreement - what can I do?
For an agreement to be joint and several it must be signed by all parties (except for Council Tax).
If a lender says you are liable for a joint debt and you believe this is not the case, you should request a copy of the original credit agreement to verify this. If you have not signed it then you are not liable - simple as that!
Where you have concerns about such a situation, believing that you have not signed any agreement, you should seek legal advice.
We hope you have found this article useful and informative find more financial information on our website.
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