Questions about helping with my partner's debt

Jessica32

Hi everyone, 
Just looking for some advice, bit of background first. My partner and I have been together for a while, we currently live together, we are both serious about the relationship and are thinking long term although we are not married.
My partner is in around £15,000 of debt, accumulated before we got together, whilst he was younger and made some decisions that he sincerely regrets during a very low point in his life. 
He is currently paying off the debt via a debt management plan, due to be paid off in around 3 years on current payments. Unfortunately despite the negotiation of this with the creditors he has been served a default notice by one of them, and we've been told by the debt support company we may receive more. 
I am paid a comfortable salary, and currently have around £30,000 in savings which has been intended as a house deposit, but with his credit score about to be slashed to pieces we're both concerned about how this will impact us getting a mortgage, which we'd been hoping to consider in the next 1-2 years. 
I have floated the issue of me loaning him some money (not the full amount, somewhere around £5000) to pay off the more problematic creditors and he immediately dismissed the idea. But I'm incredibly uncomfortable with the idea of me sitting on this pile of cash when I know his situation is causing him so much financial and personal stress, as well as concerns about how this will affect our lives together and future financial plans such as mortgages etc.
If he were to accept a loan from me, my questions are:
1. Is this an option given he's already on a DMP, and would paying off some creditors in full affect the DMP with the other creditors?
2. Would a solicitor be the best way of making up a loan agreement between us?

Additionally if he continues on the DMP without me lending any money
3. How badly will his damaged credit score affect mine (which is relatively high) given we share bills for our house and a joint bank account? 

Any advice would be very much appreciated. 

sharpe106

1. If you do decide to give a lump sum you would be best speaking to who he has the debt management plan with, then they can advise what is best to do with the lump sum. 
2. If you want it as an agreement then yes. 
3. As you have a joint bank account it will affect yours

MalMonroe

Hi, my advice would be to first and most important of all, get rid of that joint account because if you don't, your own credit rating is going to be adversely affected, if it isn't already. If his credit score is slashed to pieces, as you say, then yours will be too. In fact, yours probably isn't as good as you think it is because of that joint account so you need to detach yourself ASAP. As long as you have it, his bad score will bring yours down. Have you checked your credit file recently? Even if you want to help your partner out with his debts it's best to keep your own finances separate, so at least one of you can have a good credit rating. That'll definitely help when you want to apply for a mortgage. Next, even though your partner has a DMP at the moment, rather than spending any money contacting a solicitor, he'd be much better off speaking to someone at either StepChange https://!!!!!!/2Ys8LHl or Citizens Advice https://!!!!!!/3hlT6lu or one of the other free debt help agencies for advice about what to do next. As his debt is below £20k he may now be in a position to apply for a DRO, or at least revise his current payment plan. One of the advisers can help. I know because I've been in a similar financial situation myself.  I wouldn't, at this stage, lend him any of your money. Try not to panic or feel rushed into making decisions involving your own hard earned cash. That's a great lump sum and while it's natural to want to help your partner, it's probably better not to rush into anything and it's to his credit that he refused your offer. I wouldn't feel uncomfortable either because you're intending to share it with him in the future. 

BabyStepper

Doesn't a dmp adversely impact your credit score anyway? I'd have thought this would have already happened. How long has been been on the dmp? Sounds like he might just be in the process of having it set up. As already mentioned, make sure the 'debt support company' are one of the free ones, StepChange, etc. He does not need to pay for debt support or a solicitor or anything. Help and advice is out there for free.

I can understand you want to help him by giving him cash. However, a dmp will show on his credit file for 6 years after he signs up and that has already happened, I don't believe paying it off sooner will change that (someone correct me if I'm wrong here). Your money will be wasted really as your position re. a joint mortgage won't be improved. He's right to be stressed, it must be very stressy to enter a dmp, but you can't solve that for him with cash. If he pays off a few creditors, his dmp payment will be split between the other ones, it will not reduce or make him better off. 

You can help in lots of other ways, by not expecting to go on expensive holidays, or needing expensive gifts, helping him with budgeting, sourcing things cheaply, making things fun and free, you get the picture. You can be in it together without handing over any cash and while that's happening, just stockpile your own cash or top up your pension or whatever. 

Dave Ramsey has a lot to say about relationships, finances and boundaries. He's really good and worth a listen on youtube (block out the Christian stuff if it's not your thing). He would say it's not wise to lend money to someone who has a history of not being able to pay - it's the equivalent of giving him a consolidation loan and we all know that can make a situation worse. It may also cause problems in your relationship if he defaults on payments to you or struggles to get to grips with budgeting, which he will, because we all do at the start. You want your help to be actually helpful, where he can learn how to manage money (even if you're the one in the relationship who's better at it) and not get in this position again.      

Also, good advice about checking your own credit file and protecting yourself. You could, for example, buy the house in your name only and both live in it until his position is better. But not if your joint bank account has a negative impact on your score too. 

Good luck, and keep posting.  

[Deleted User]

Jessica32 said:

Hi everyone, 
Just looking for some advice, bit of background first. My partner and I have been together for a while, we currently live together, we are both serious about the relationship and are thinking long term although we are not married.
My partner is in around £15,000 of debt, accumulated before we got together, whilst he was younger and made some decisions that he sincerely regrets during a very low point in his life. 
He is currently paying off the debt via a debt management plan, due to be paid off in around 3 years on current payments. Unfortunately despite the negotiation of this with the creditors he has been served a default notice by one of them, and we've been told by the debt support company we may receive more. 
I am paid a comfortable salary, and currently have around £30,000 in savings which has been intended as a house deposit, but with his credit score about to be slashed to pieces we're both concerned about how this will impact us getting a mortgage, which we'd been hoping to consider in the next 1-2 years. 
I have floated the issue of me loaning him some money (not the full amount, somewhere around £5000) to pay off the more problematic creditors and he immediately dismissed the idea. But I'm incredibly uncomfortable with the idea of me sitting on this pile of cash when I know his situation is causing him so much financial and personal stress, as well as concerns about how this will affect our lives together and future financial plans such as mortgages etc.
If he were to accept a loan from me, my questions are:
1. Is this an option given he's already on a DMP, and would paying off some creditors in full affect the DMP with the other creditors?
2. Would a solicitor be the best way of making up a loan agreement between us?

Additionally if he continues on the DMP without me lending any money
3. How badly will his damaged credit score affect mine (which is relatively high) given we share bills for our house and a joint bank account? 

Any advice would be very much appreciated. 

I sincerely hope that when you say "debt support company" that your partner is using one of the debt charities (Step Change, National Debtline and CAP UK) or PayPlan and not one of the bottom feeders who charge people in debt for the privilege of setting up a DMP, something can be done for free by the debtor themselves or via one of the aforementioned organisations.

Firstly, forget about credit scores.  There's no such thing as a universal credit score.  Lenders look at credit history when making lending decisions not some number made up by the likes of Experian.  If your partner is already in a debt management plan then his credit history is probably already full of late payments so in that respect the damage is already done.  You are financially linked to your partner via the joint account so his credit history is linked to yours and as @MalMonroe suggests you should try and sever this financial link.

A DMP is an informal arrangement between a debtor and his/her creditors so your partner would be able to pay of some creditors and not others.  He might even be able to make full & final settlement offers to some of his creditors.  However, if he does not want to take or even borrow the money from you then you should respect his decision.  It could very well be worse from him knowing that he owes you money rather than some faceless bank or building society.

katsu

Find a mortgage broker for advice. You'll need one as your partner's debt repayments will be on their credit history now.

katsu

Sorry,  posted quickly! 
As they've already been in debt management for some time then you'll benefit from getting a mortgage broker to help you both find a mortgage and to discuss your options. 

sourcrates

Hi,

Anything except full contractural repayment will attract a default, or an arrangement to pay marker, this should have been explained to you beforehand, its part and parcel of debt mangement.

I too am concerned as to who you have chosen to to "manage" this DMP for you, please tell us its not a fee charging DMC you plucked from Google ?

Its always difficult to advise on a 3rd parties situation, ideally you want a solution that tackles all of the debt, not just odds and sods at random, its nice you want to help, but, and its a big but, these forums are littered with stories of loans to freinds that have gone wrong, so many variables are involved here, the best thing to do is to get him to post up a statement of affairs, on here, and we can see what he has coming in, and going out.

It could be debt management is the best choice for him, but with a free provider, if not already with one -

https://www.stoozing.com/soa.php

enthusiasticsaver

I would not  lend him the £5k.  If he is paying back his debt on a DMP then presumably there is no interest and defaults will be on his file anyway so transferring £5k of the debt from other creditors to you  puts you in a vulnerable position.  Read the many threads of other people who have done as you are considering and regretted it. You are not married and you would do best to break any financial links like joint accounts with him until he is in a more stable financial position. If you need his income to buy a house you would be better waiting until the defaults fall off his file and the DMP is finished. He really needs the debts to default asap as they will fall off his file 6 years after that so the sooner the better. A loan agreement is worth nothing unless you are willing to go to court to enforce it.  Just focus on helping him to live within his income and budget and don't push him to do expensive trips or meals out or holidays.