Someone Else’s Credit Card Debt
After a relationship breakup one of the most common question asked is about liability in respect of credit card debt, and whether you are responsible for someone else’s debt. The general principle is that the debt belongs to the person who took it out, but this is not always the case.
If the credit card debt has been incurred by one party within a relationship and then after the breakup that person assumes responsibility, and continues to make payments, consequently no problem arises.
Where the path gets a bit muddy is when the credit card is under the name of a person who did not actually create the debt. After a relationship breakup it can very hard to prove that the person owning the credit card did not incur the debt. Whilst this may not seem fair, at the end of the day the debt has to be paid, and it will fall back onto the owner of the credit card. In many cases, if the person is going to have difficulties meeting payment since their financial circumstances have changed they can enter into an agreement with the credit card provider to pay the debt off.
It is a fact of life that circumstances change during our lifetimes, losing a job or having a marriage breakup can have a big impact on a person’s ability to pay their debts. Whereas someone may have had a good credit history in the past, this can change within a relatively short period when under pressure. If you find yourself in this situation it is far better to approach the credit card provider early on and try and come to a payment arrangement, rather than waiting until the credit card debt has got out of hand.
Arrangements can be fairly restrictive and quite often involve freezing the debt to stop any escalation and reducing the interest rate, plus you will not be allowed any further usage of your card until such time as the debt is cleared or lowered. Be aware such arrangements can impact on your credit ratings.
After a breakup, if the intent is simply to get rid of any existing debts, the best way to do this is to focus on the high interest cards first, and reduce or clear the balances on those cards. By doing this you reduce the amount of interest to be paid; an alternative providing you have a good credit rating is to consider a balance transfer or simply moving to a card with a lower interest rate. Whilst this might take longer to pay off, at least it makes your repayments manageable.
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For more information on credit card debt, credit card comparison, and balance transfer credit cards, please contact your bank or provider, or search the web.
