What to Expect If You Share a Joint Debt
Joint debt is simply considered a debt that you share with another person, for example, if you and your spouse both need to sign and take equal responsibility for a debt, it is considered a joint debt.
This means that you are both responsible for repayment, whether only one partner is repaying the debt or both are contributing equally. Lenders do not care where the monthly payments come from as long as the debt is paid off in full. If the debt is not repaid on time, they will try to collect the entire amount from one or both of you. Your credit is equally affected positively or negatively depending on the status of the debt. If payments are made on time, both of your credit scores remain positive. If, however, you or your spouse are late with payments it will reflect negatively on your respective credit scores.
How can joint debt affect you?
There are several ways that joint debt can impact your relationship and finances. You may want to consider these points if you have joint debt, or are considering taking on a joint debt:
- A death, divorce or bankruptcy does not absolve you of the joint debt.
- If you divorce, you may not be able to get your joint debt paid off as a settlement.
- If you have a joint debt with a relative who defaults on the loan, you are responsible even if you have never seen or used the item purchased (vehicle, home, etc.).
- Joint debt puts enormous strain on a relationship when one party cannot pay.
- If one person is responsible for paying the bills and you have given them money to pay your share, your credit can still be affected if they are not paying.
- In the case of co-signing for someone, if they simply neglect to pay the debt, you may not find out for a while.
- Your credit can be damaged quickly if anything goes wrong with the process of repaying a joint debt.
- If you or the other party declares bankruptcy, your joint debt still exists and you will still need to repay it.
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