Paying off partner's credit card debt

ccmoney

Hi MSE,

Wondering if you can offer some advice. I've been with my girlfriend for a little over 3 years and like I guess is typical in a relationship we have different attitudes to money.

She currently has around £17k of credit card debt, let's say £9k with Virgin, £3k with Natwest, £2k with Barclaycard and £3k with Post Office.

We have been wanting to buy a house together for a while but she was trying to pay off her debt.

She recently took a pay cut from around £27k to £17k and I see there as being even less chance of her paying it off any time soon.

I have saved hard since graduating and would be able to pay off these debts and put money forward for a deposit for a house.

My questions are:

1. Is there any way or is it at all likely that any of the creditors would accept a smaller sum to settle the debt, e.g. if she offers less than the 9k to Virgin to settle the debt and close the card off (we would be opening a new joint account and savings). If they accepted this, would it leave a negative record on her credit history? Her Noddle report shows a score of 3/5 (was 4/5 but seems to have dropped though I can't figure out why) and no missed payments or anything negative.

2. Would it be advisable to get these all paid off before talking mortgages with banks or a broker? Or will it not affect their decision providing I have the cash to pay off the debt.

3. Any advice on how to do this in a safe manner. We are planning on having a joint account and sharing money soon anyway but keeping in mind we are not yet married I would prefer some sort of protection in case anything were to happen shortly after I paid her debts. My preferred way of handling it would be something like an agreement that I would transfer a set amount (£250 let's say) a month from our joint account into a savings account in my name which providing we were still together I would end up spending on us anyway, but that if we were to break up then she would still owe me the remainder of the debt.

4. Would it be better for me to pay the credit card companies directly or transfer her the money and then have her pay them?

Many thanks for any help.

CLAPTON

1. to get a settlement figure she would need to stop paying ; wait say 6 month while they phone her every day demanding payment and then she may get a full and final settlement deal

this would trash her credit status for 6 years

you would then be mad to have a joint a/c with her as that would form a financial link with yourself and damage your credit status too.


2. mortgage: they will take into a/c debts as part of their affordability criteria which will vary between different lenders (maybe try online calculators for the lenders you are considering.)

3 if you don't trust her then no agreement will be much good.

If she doesn't have the money then what good is a promise to pay?

grumbler

4. I don't see any difference.

david39

In respect of your 4th query, if you decide to clear her debts, do it directly from your bank account to her creditors otherwise you have no surety that she will not move the money or spend it elsewhere and leave the credit card accounts unpaid.

Regarding your entire post my advice is, unless you are prepared to look on the act of paying off her debts as a gift, then don't do it. If you perceive it that way and are happy with it, you will not be so worried if she does not pay you back.

This board is littered with distressed posts from people who have loaned money to friends, relatives and partners who have failed to reimburse them and left them holding a debt that was not of their own doing.

Good_Goose

Only clear her debts with your money if you are happy to never see it again if you split up.

Have a look at this thread for how things can go VERY wrong:

https://forums.moneysavingexpert.com/discussion/4748128

triple_choc_chip

On the Nat West and Tesco mortgage calculators, every £1k of credit card debt lowers the mortgage offer by £5k. That's a reflection on how they view peops who are in debt with c.c's when considering ability to pay.

So it looks as if her different attitude to money is going to impinge on your personal financial planning whichever way you go.