Debt affecting partners?

Sagittarius

Hi everyone

Just a quick question about if/how debts and being on a DMP affects people you're directly or indirectly tied to. My situation is:

Currently seperated from husband, name is on the mortgage still but he is taking that on in the divorce, my name is also on a joint loan we have together that I've been told would have to be included in a DMP if I decide to begin one.

I am also in a new relationship now but we don't live together or have anything joint, I am privately renting a flat alone.

In light of that, my questions are:

1. Would me being on a DMP affect my soon to be ex husband's credit rating because of the joint loan/mortgage my name is still attached to?

2. Would me being on a DMP affect my new partner's credit rating if for instance we decided to move in together (would only be renting) or if we opened a joint account together?

Or are there any other things that could affect either my ex or my current partner that I should be aware of?

Thanks in advance for your help!

fermi

1. There would be a financial association in existence because of that see: http://www.experian.co.uk/consumer/questions/askjames212.html

2. Only if you have joint financial accounts. So don't open a joint account. Keep them separate.

RAS

Who are you talking to about this DMP? As you need to talk to one of the debt charities. I am concerned about

Sagittarius wrote: »

1. Would me being on a DMP affect my soon to be ex husband's credit rating because of the joint loan/mortgage my name is still attached to?

Yes and if you want him to take over the mortgage, you need to ensure that he does this before you start a DMP - or stop paying debts. Otherwise his credit rating will suffer and you may not be able to come off the mortgage.

The joint loan will also caused problems. You do not say wheter you are contributing half, nothing or paying it all. if you reduce your payments, the creditors will mark down both your and your ex's credit ratigns and chase him for the money you have not paid - you are both jointly and severally liable for the whole debt.

Has your DMP provider not explained this to you?

Sagittarius wrote: »

2. Would me being on a DMP affect my new partner's credit rating if for instance we decided to move in together (would only be renting)

No problem.

Sagittarius wrote: »

or if we opened a joint account together?

This would affect their credit rating. Do not do it.

Sagittarius wrote: »

Or are there any other things that could affect either my ex or my current partner that I should be aware of?

YOu may well struggle to get passed the creidt check for a rental property, so your new partner may have to take on the tenancy in his name with you are permitted occupier. That may affect what you can afford and gives you no security of tenure.

Sagittarius

OK thanks to you both. I'm not currently on a DMP but am considering one with the CCCS.

RAS - we are currently paying 50-50 towards the loan. I transfer my half into his bank account monthly and then the instalment gets taken directly from his. I spoke to National Debtline last night and they did mention the joint and severally liable thing but I'm sure they also said that if I was on a DMP it would just be my half...however not sure how that would work, thinking about it.

To avoid affecting his credit rating, would it be a better idea to come to a written agreement whereby he takes on the full loan and I agree to pay him a certain amount each month towards it?

Thanks for your help. I will avoid opening a joint account with my new partner.

Tixy

Sagittarius wrote: »

To avoid affecting his credit rating, would it be a better idea to come to a written agreement whereby he takes on the full loan and I agree to pay him a certain amount each month towards it?

You won't be able to do this. Unless the joint loan is fully repaid you will not be able to file a notice of disassociation. Until you can do that then your credit file will affect his. Only way for his not to be affected would be if he could take out a new loan for the same amount and repay the loan. Given that he is about to make a mortgage application / try to transfer the mortgage into his name taking out a new loan could cause problems with this.

You also won't be able to pay him an amount towards it each month, as once in your DMP you simply won't be able to afford to, as your DMP payment will be based on what you can afford after basic living costs.

If you have a joint loan either it goes into your DMP and you pay a small pro-rata amount per month through the DMP and he'll then be chased for the remainder. Or you pay nothing and he pays it all (but still his rating will be effected by your joint financial association).

Sagittarius

Tixy wrote: »

You won't be able to do this. Unless the joint loan is fully repaid you will not be able to file a notice of disassociation. Until you can do that then your credit file will affect his. Only way for his not to be affected would be if he could take out a new loan for the same amount and repay the loan. Given that he is about to make a mortgage application / try to transfer the mortgage into his name taking out a new loan could cause problems with this.

You also won't be able to pay him an amount towards it each month, as once in your DMP you simply won't be able to afford to, as your DMP payment will be based on what you can afford after basic living costs.

If you have a joint loan either it goes into your DMP and you pay a small pro-rata amount per month through the DMP and he'll then be chased for the remainder. Or you pay nothing and he pays it all (but still his rating will be effected by your joint financial association).

Thanks Tixy. So if I have understood correctly, I realistically cannot enter a DMP without affecting his credit rating? This worries me massively.

Tixy

Not unless the joint loan is paid off first (and the mortgage is transferred to just his name).

Is he likely to be aware you are going to struggle financially? Maybe after you've talked it through with one of the charities you could discuss with him?

I guess there is no equity in the house which you will be entitled to (and that could pay off the joint loan for example)?

Sagittarius

Tixy wrote: »

Not unless the joint loan is paid off first (and the mortgage is transferred to just his name).

Is he likely to be aware you are going to struggle financially? Maybe after you've talked it through with one of the charities you could discuss with him?

I guess there is no equity in the house which you will be entitled to (and that could pay off the joint loan for example)?

So for example (for argument's sake), if he took out another loan on top of his new mortgage and paid off our joint one in full, we could then draw up some sort of agreement that I'd pay x amount off my share of that debt, and it would then not affect his credit rating?

Yes I'd say he'll probably have some sort of awareness that I'll be struggling financially due to debts. I earn a decent living but it is literally the debts that are getting out of control.

Unfortunately you're right, there's no equity. We bought in 2006 when prices were high, without a deposit (100% mortgage) or any savings whatsoever (enter the joint loan) and have been paying interest only on the mortgage ever since. In fact it seems to have been a very stupid decision to buy a place, but we were pretty young then and possibly had some bad advice.

Thank you again for being so helpful.

Tixy

Your example would mean you/he could file notice of disassociation with the 3 credit reference agencies and that then what you did wouldn't affect his credit rating or ability to get credit.

But the problem would be you being able to afford to pay him anything - as your DMP provider won't allow for this payment, they allow you fairly basic amounts for living costs and then you pay the rest of your money into your DMP.

The only way you'd likely to be able to afford to pay him anything would be if you could spend less than the DMP provider would allocate in particular areas (eg if they allowed say £140 for groceries and you could manage on £80, potentially you could free up that money and then spend on what you want)

Sagittarius

OK thanks again Tixy. This is really worrying me now and putting me off a DMP. I'm considering going to my parents for help, but I really didnt want to have to do that and I don't even know if they could. I'm so angry at myself, I knew I would affect myself in all this but didn't take a minute to think how I'd affect others.

Experian_company_representative

In relation to renting, landlords cannot access your private credit history data. They can only see public data on any checks they carry out, so being on a DMP would imply not be visible to them.

James Jones