It’s customer question time again and this time it’s a very interesting topic. The question was ‘My ex-partner has gotten themselves into debt so I’m financially linked to a bad borrower. What can I do?’
Our Vineland auto loan team took this one on and explains what they told the customer about being financially linked to a bad borrower.
Partners and bad debt
First off, don’t worry. Your ex-partner’s debt should not impact you unless it’s in joint names.
Any debt or credit issues a current or past partner has won’t impact your credit score or anything to do with your own credit. That is unless the debt they are defaulting on is in joint names.
So, if your ex took out an auto loan in their own name and missed payments. It will have nothing to do with you. That is true whether you’re still married to them or never married.
Do you inherit a partner’s bad debt?
If you marry or set up home with someone with bad debt, does it become your responsibility too?
Not, it doesn’t. If the debt was taken out in their name, it’s their responsibility. The only debt you’re responsible for is the debt with your name on it.
If you took out an auto loan or mortgage in joint names, you’re jointly liable for payments. If they default on their side of the bargain, you are liable to cover it all.
However, if they had the loan when you married and you’re not on that loan, you don’t inherit the debt.
Neither are you liable for it if they pass away.
Does a partner’s debt or poor credit affect you?
Your partner’s debt or poor credit will have no impact on your own credit. That is, unless the bad debt is in joint names. As long as your name isn’t on any of the agreements, it will not impact your credit at all.
There is an exception though.
If you and your current partner have a mortgage or loan in joint names, they will be linked to you. They will be referred to as a financial associate.
If you applied for a credit card or personal loan in your own name, any financial associate can be taken into account when the lender makes a decision.
It won’t always impact your application and shouldn’t impact your credit score but it may have an influence over a lender’s decision.
Removing financial associates
If you want to remove links to people with bad debt, you can. Both Experian and TransUnion have a function that enables you to remove financial links with ex-partners or other people you’re linked to.
TransUnion calls it ‘disassociation’ and has a form for that.
Experian calls it removing a financial connection and also has a form for that.
The credit bureaus will investigate the link and may remove the link between you and the other person. They may not though and that’s certainly a risk. Expect to wait in excess of 28 days for decision though!
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns about being financially linked to a bad borrower, please don’t hesitate to contact us here!