Long one RE marriage/one partners debt.

kimplus8

I am mid 30’s and partner is mid 40’s. 

I am debt free except for a credit card, I pay off balance each month to build my credit rating in prep for a mortgage and I earn around £2800 PCM. I also have £12000 in savings.

DP has around £19000 of debt split between a consolidation loan and a credit card and earns around £1200 PCM. This is from before we were together but they keep the balance there and never seem to get rid of it. They want to consolidate again and try to manage debt but IMO it’s a sinking ship.

I love them very much and want to stay with them. We are thinking about marriage and a future house, but I recognise that 

a.     They wont be able to go on the mortgage because of their debt

b.     I want a prenup

c.     I need protection from their debt, how can I do this?

 

I guess what I want to know is,

Is a prenup a good idea? Can we draw up something stating I am not responsible for their debts should they need to go BR?

Maybe we should consider not getting married at all and just cohabit as we are now and should we get a cohabitation agreement if I get a mortgage.

I know folk will say not to stay with this person, but I love them and we have kids to consider. How can I make this work and not be financially held back from my mortgage free goals?

WillowCat

Whether married or not, you would not be liable for their debt unless it is a joint debt.  So theoretically they can go bankrupt alone.  If you marry then divorce the debts might be considered when looking at assets and liabilities though.

A prenup is always a good idea, but if you have, or plan to have children, it needs to be very carefully considered and the needs of the children will always be paramount.  Because of this, a prenup which doesn't give the children enough consideration (and that will include the primary carer of the children, and also to a lesser extent the needs of the other parent to be able to 'host' the children) may well fail if challenged in court.  Regardless, both parties to a prenup need to take their own independent legal advice and it is best if the prenup itself is written by a solicitor.

In your situation I'd be hesitant about marrying unless you are happy to commit all in to a joint life together. 

gwynlas

Further consolidation would be futile as they would be paying interest on interest, they would be far better off with a debt management plan. You do not say if there are already children involved or you plan to have children. I would normally advocate for marriage but in thiis case would hold off until debts addressed. You should go forward with a mortgage based on your savings and income alone.

gizmo111

The debt wont stop them going on the mortgage it will just be the affordability is decreased as the payments will be taken into account.
Try the debt free wannabee boards and put up a SOA, and work together with your partner on a plan to clear the debt.  (Not suggesting that you pay the debt off - but there may be ways that you can make savings as a household to clear it in a set time.

Savvy_Sue

I would want an open and honest conversation about how the debt arose, and why it isn't being better managed - or, if you like, what the plan is to reduce it. 

gwynlas said:

Further consolidation would be futile as they would be paying interest on interest, they would be far better off with a debt management plan. You do not say if there are already children involved or you plan to have children. I would normally advocate for marriage but in thiis case would hold off until debts addressed. You should go forward with a mortgage based on your savings and income alone.

And I agree, getting in touch with one of the debt management charities like https://www.stepchange.org/ or  https://capuk.org/

would be a good step. 

gizmo111 said:

The debt wont stop them going on the mortgage it will just be the affordability is decreased as the payments will be taken into account.
Try the debt free wannabee boards and put up a SOA, and work together with your partner on a plan to clear the debt.  (Not suggesting that you pay the debt off - but there may be ways that you can make savings as a household to clear it in a set time.

This is where I'd want the conversation: I'd be happy to work with someone who was willing to address the problem - maybe them putting less into the household pot and more towards the debt - but I've known too many people who were happy to have their debt 'carried' by a partner and apparently incapable of reducing their random spending, their debt, or the problem which led to the debt being ongoing. 

Jude57

Great advice so far but just a couple of points. First, if your partner can, on paper, afford their contractual payments, then none of the reputable debt advice charities will offer a DMP. The whole point of a DMP is asking creditors to accept a reduced monthly payment and freeze interest. Why should they agree if the contractual payments can be met? 

Second, unless your partner has realised that their current spending habits need to change, there's nothing you can do to improve the situation. Their being on board is the only way to deal with this.

I'd head over to the debt free wannabe board for more detailed information and support. The starting point there (and with all the debt advice charities) is a Statement of Affairs - a budget. It should reflect the current situation, not the aspirational intentions, so if your partner spends £300 a month on haircuts, use that figure. Be prepared for posters there picking your first SOA apart but remember, they've been in the same position themselves so they do know what they're talking about.

Good luck to you both.

Spendless

Hi Kim. I remember you from the days when you were pregnant with your youngest child. You have clearly worked incredibly hard since then to get to where you are now. I wouldn't jeopardise that. Tackle the debt first and then get married. As this might take several years you should look at what you need to cover yourselves should either of you unexpectedly die before marrying as you won't have the legal protection that would bring eg look into making wills.; It used to be the case that pre nups were not legally binding in England, not sure if that's still correct or if you live in a different part of the UK where laws are different but again worth checking out, to see what the situation is, if a pre nup would actually stand or at most just be taken into account but with no guarantees. 

Good luck/

HampshireH

An SOP is definitely worth doing. £1200 a month isn't a huge income. Do you put 50/50 into the household or do you have a % of your respective salaries?

Must be very frustrating but it shows he really isn't interested in sorting the debt out or doesn't have the same ambitions as you. But he seems happy to share the details which is something.

The interest being paid must be quite high which with minimum payments is probably why it never decreases.

See if he will commit to an honest SOP and go from there 

kimwp

I feel marriage or living together is an all-in situation- share the work and share the rewards- as close to 50:50 as makes sense. Paying off the debts would be part of the work - as a couple, it's part of your overall wealth calculation. If you wanted to go on a nice holiday/buy a new car, but he couldn't afford his half, if you then pay for it, you're effectively paying off his debt at that point anyway.

It might be worth considering not just how to protect yourself from his debt, but how his and your combined finances will work as part of your lives together.

TBagpuss

A prenup would be sensible - it allows you to discuss and agree on financial issues before you take the step of getting married, and in particular to talk about the debt nd how you are going to deal with it.

You would not be directly liable for any debt in your partner's name as you don't have a contract with the lender; however, if you married, then in any divorce, a court would look at the full financial position and could take into account the debt when deciding what is fair and what your respective needs are, so an agreement which expressly states that your savings will be yours and won't be classed as matrimonial assets to be divided, and that their debts are theirs and won't be taken into account in assessing their needs, will give you a degree of protection.

If you do buy a house, you would also be wise to have a formal agreement in place as to what your respective interests are, and that tat agreement is to be treated as a post-nuptial agreement and followed in the event of any divorce (this might, for instance, give you a fixed percentage based on you using your savings as a deposit, and would allow the two of you to discuss and agree on whether there would be any other adjustments, for instance they did ort didn't pay towards the mortgage.

It may also be worth considering why they are not making headway on clearing the debt. Is it because the interest rates are high enough that the amounts they can afford just pay the interest and barely touch the capital, or is it that they are still building up new debt as fast as they are paying off the old, or are paying only the minimum payments.

I think that understanding their and your differing approaches to spending and paying off debt will be important in working out how you manage your finances as a couple, and whether this is something which is going to change .It's worth thinking about the implications - for example, if they are bad with money, how are things like paying for holidays or household repairs or expenses going to work? Are they going to be able to save and to contribute their share, or are you going to find yourself in the position of either subsidizing them or doing without ? If they can't get out of debt, is that going to be a cause of stress for you or pressure for or from them, or are your going to be able to agree that you have different styles and that you each manage your own?

You may want to think about whether getting married will work - in some respects, staying unmarried and having them pay yu a fixed amount in rent may work better, although again you would want a formal cohabitation agreement in place.

And if children are a possibility you need to think about that, and how the dynamics may change id one or both of you takes parental leave 

You can have an agreement that basically means you keep your finances totally separate even after you marry, and while it is not 100% foolproof, as a court can still redistribute assets on divorce, 

Doodles

Personally I am all for simplicity in life, so I would suggest marriage isn't on the cards until the debt is paid off and you are both are on an equal footing financially speaking.

Their take home salary is fairly low so could they look at a 2nd job, or upskilling to increase their future earning opportunities.  At the very least there has to be work from their end to address the issue. 

I didn't think prenups were legal in this country, but perhaps I'm wrong.