Debt problems come in all shapes and sizes. So do personal relationships. And debt management plans (DMPs) are very flexible arrangements. The combination of all these variables means there isn’t a simple answer to the question about how your DMP will affect your partner, but here I look at the most commonly points that people worry.
Will my partner’s income be taken into account?
In debt management, you show your creditors an Income & Expenditure list – the “difference” between these two figures is basically what gets paid to your creditors every month. There are two options for how the Income & Expenditure is drawn up for a couple.
Use a joint budget
One approach is to use your common household budget with both your incomes and all expenditures being listed. If you have lived together a long while and have children and assets together this is often the most sensible approach.
Here your partner’s income is contributing to your DMP, but it will let you clear the debts faster. They may have been “family” debts anyway, even though they are in your name. If you have a joint mortgage and want to remortgage, or want to get a first mortgage together, then you both need to sort out “your” debt problem as fast as possible.
Split the expenditure
The alternative is for the joint expenditures (rent, council tax, utilities, groceries etc) to be divided between the two of you. 50/50 is the simple split, but if one of you earns a lot more dividing them according to your incomes can be more sensible. Then your I&E shows your portion of the joint expenditure and your personal expenses – your travel costs, clothes etc.
With this approach your partner’s income isn’t going into your DMP. It’s common to feel this is more appropriate if your debts came from before you met.
If you are discussing a DMP with a debt management firm and they want your partner’s income taken into account and you don’t, then talk to a different firm (choose one that doesn’t charge any fees such as StepChange!) or even set up your own debt management – read Is it a lot of work to run my own DMP?
Can my partner carry on paying his own debts?
If you are going for the “dividing joint expenditures” option, then your partner should be left with some money after paying their share of the joint expenses. If this money is enough for them to pay their own expenses and make their own debt repayments then this is fine – and it means they will be able to keep their good credit rating.
But if your partner has a lot of debt and can’t afford to pay their debts and their share of the joint expenses, then they too have a debt problem. Here it’s usually a good idea to see what your joint options are as a couple for your debts.
This could mean you both having a DMP, but if the debts wouldn’t be repaid in a reasonable length of time, you need to consider other options such as insolvency or selling the house. And sometimes it can be useful for the two of you to have different types of debt solutions because one person has a much smaller problem or it may be possible to protect one person’s credit rating. See When a couple needs two different debt options, which looks at this. It may sound complicated, but once it is underway, you may get a much better result!
What about my partner’s credit rating?
Your partner’s credit score will only be damaged by your DMP if you have a financial link:
- a joint bank account;
- a joint loan or mortgage (NB having a second card on the other’s credit card account isn’t a financial link) ; or
- your partner has guaranteed a loan you have.
It’s worth looking at their credit report with each of the three Credit Reference Agencies in detail. If you are financially linked, your name will appear on your partner’s credit report in the Association section; if it doesn’t appear, then you aren’t linked.
We have a house – could that be affected?
When you are in a DMP, it is still possible for a creditor to take you to court for a CCJ and then get a “charge” over your house. This isn’t common but it does happen – read Is my house at risk? for more information. But if it does, the charge is only on your share of the equity; your partner’s share cannot be affected.
This is more likely to occur if you owe a lot to a creditor and you are making low payments to your DMP for a long while. A short-term DMP as a breathing space is often a good idea. but if your DMP seems likely to be very long-term and you have equity, then it would be a good idea to look at other possible debt solutions instead.
I’m moving in with my partner, what happens to my DMP?
Most of the time when you move in with someone your expenses will decrease.You should tell your creditors and show them a new Income & Expenditure sheet (see above for the two ways of drawing this up for a couple) and start paying them more… But I wouldn’t rush into doing this – give it six months so you know this is the right move for you, so you have a good feel for the costs of living together and you are both happy with how much you are each paying towards the bills. Then look at how your DMP should be changed.
Sometimes your expenses will increase – if you had been living with your parents for free, or if your new partner is going to be losing a lot of benefits when you move in. Here you need to redo a new Income & Expenditure sheet straight away and reduce your DMP payments – your creditors may not like it but you don’t have an option. If this means your DMP is no longer sensible, you may have to look at options such as bankruptcy or a Debt Relief Order.
Will my new partner’s house be safe if I move in?
Yes. If the house is not in your name, it cannot be at risk from your DMP.
Will it make a difference if we get married?
No, this won’t change your DMP at all. Getting married won’t affect the legal liability for your debts, it won’t link your credit ratings and it won’t change the amount being paid to your DMP.
And whatever your situation…
Talk it through with your partner. Emotional support can be just as important as financial help. To you the DMP may have been sheer relief from pressure from your creditors – but to your partner it could mean worry, postponing buying a house or a feeling that life is on hold. There are more important things than money and debt – don’t let these ruin your relationship.
The reasons people worry about starting a DMP
how PPI can get you out of debt!
A Guide to Debt Management (DMPs)
Sarah says
Hi
My partner had a number of defaulted debts which have recently been paid off. This is not yet reflected on his credit file so he will have ‘bad credit’ for a while longer.
We are planning for him to move in with me. I know that my credit is only affected if we have any joint financial accounts – we don’t. However I want to know whether this is the case if he registers on the electoral register with my address?
He will obviously need to get on the register at some point to improve his credit score.
Thanks
Sara (Debt Camel) says
Your credit rating will not be affected if he is on the electoral roll at the same address as you – just don’t have any joint bank / loan accounts.
Maz says
Hi
My husband is looking at getting a dmp as he is struggling to pay credit cards off. Will this affect his credit score to get a mobile phone contract or if we move when the estate agent does a check on us to rent a house?
Thank you
Maz
Sara (Debt Camel) says
Yes it will affect his credit score, see https://debtcamel.co.uk/dmp-credit-rating/ for details.
This article https://debtcamel.co.uk/worried-dmp/ looks at the worries peiople have about a DMP, including the effect on credit ratingss: https://debtcamel.co.uk/worried-dmp/.
Gemma says
HI
I did a debt relief order 4 years ago and now want to buy a house with my mum is this possible?
Thanks
Gem
Sara (Debt Camel) says
Hi Gemma, legally you can buy a house now, however you are likely to find it very difficult to get a mortgage company that will lend to you at a reasonable rate whilst the DRO is still showing on your credit record, which will be two more years. You need to talk to a mortgage broker about this.
John says
I have debts in my name only and am considering bankruptcy. However, my wife purchased the house in her name only( 10 years ago) will the house be at risk of I do go down the bankruptcy route?
Sara (Debt Camel) says
Hi John, this article https://debtcamel.co.uk/partner-bankrupt/ is mainly aimed at a new relationship, but have a look at the section there about “beneficial equity”. The Official Receiver will be interested in whether you have contributed a lot to the house even though it is in your wife’s name. This can be a complicated area and it’s a good idea to talk to a debt adviser about this and bankruptcy in general.
Robs says
Hello I hope you can help myself and my boyfriend are in the proces of applying for mortgages he is currently on a DMP which is completed April 2018, if we were to apply for a joint mortgage (me being main applicant) wouldn’t this increase our chances of being accepted as oppose to him being main applicant
Thankyou
Sara (Debt Camel) says
I doubt whether you will get a joint mortgage with you being the main applicant. It doesn’t realy matter who is the main applicant – both parties to a mortgage are equally liable for making the payments. See https://debtcamel.co.uk/dmp-mortgage/ for more about DMPs and mortgages.
Ian says
I owe money to a credit card company which I can’t afford to repay. The company has asked for an income and expenditure breakdown to back up my claim that I can’t repay at the rate they want. Am I correct in saying that I do not have to declare my spouse’s income?
Thank you in advance.
Sara (Debt Camel) says
That’s correct, but you should divide the expenses up between you according your income. So if she earns twice as much as you, you should be paying 1/3 of the rent, bills etc. But if you earn the same amount divide them 50/50.
Ali says
My partner is on step change and we want to get married…do I become liable for any of his debts and would his repayments change at all
Thank you in advance
Sara (Debt Camel) says
Congratulations! Marriage doesn’t change liability for his debts. And if you have been living together so far it shouldn’t change his monthly repayment. If you are just moving in together then obviously his expenses will change so that could affect his DMP.
lee says
Hi
I am in the process of applying for a DMP, the house me and my wife have are in her name as is the mortgage, but we have been financially linked previously when we applied for a joint mortgage (it was rejected) will the DMP now affect my wifes credit score as were we previously linked in an application?
Sara (Debt Camel) says
Hi Lee, so the joint application was your only connection? You don’t have a joint bank account at all?
Do you mind me asking a couple of questions about the DMP – how long do you expect it to last? Which DMP firm are you using?
lee says
yes the joint application was our only joint connection, no joint bank accounts
Stepchange – they have said if there plan is agreed it could take 3 years 11 months to pay off my debt
Sara (Debt Camel) says
The DMP sounds good! How long ago was the joint credit application?
lee says
thanks hopefully my creditors will agree to it. Application was beginning of November 2016
Jane says
Hi, I have several debts from before I got married all debts are in my name. I’m now considering going bankrupt. I phoned a company today who said there was a better option than bankruptcy it would clear the debt in 4 years and cost £30 per week even though were currently in receipt of benefits due to our Son being disabled and my husband losing his job. Anyway they said that my husbands benefit plus the benefit for my son would be included as the income even though these are my debts so you have any advice. They said that bankruptcy isn’t always accepted and I could end up paying more because of my sons disability money.
Sara (Debt Camel) says
I don’t know who you spoke to but I suggest you talk to National Debtline on 0808 808 4000. It is incredibly rare for bankruptcy to be rejected – most of the cases that are are for people from abroad coming to England to try to go bankrupt here…
If your only income is from benefits, you would not have to make any weekly or monthly payments in bankruptcy. But a Debt relief order could also be an option for you – National Debtline can advise.
Jane says
It was Bankruptcy Scotland I spoke to. I received a Simple Procedure Notice Of Claim today so I’m worried sick, they didn’t really put my mind at ease to be honest.
Sara (Debt Camel) says
OK, I am not sure who that firm is – National Debtline have Scottish experts so I suggest you speak to them: https://www.nationaldebtline.org/S/Pages/default.aspx. Sorry, there is no point in me guessing, it wouldn’t help you at all. Good luck!