Can I Be Responsible For Someone Else's Debt?

Published: 23rd March 2010
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With an estimated 20,000 new cases of debt repayment problems coming to light each month, should other family members be worried that they will be left responsible for unpaid debts?

According to the Insolvency Service, over 10,000 people each month are formally declared insolvent and unable to pay their debt. With so many new instances of debt repayment problems occurring, many people are worried that they may be liable to pay debts left by family members or others who are known to them.

In general, there is no need to worry about becoming responsible for paying someone else's debt. Legally, debts are only owed by the individual who borrowed the money. As such, if your husband, wife or anyone else you know has taken a personal loan, credit card or any other form of debt in their own name which they are subsequently unable to pay, you cannot be made liable for this.

What if my spouse is in a debt management plan or IVA?

If an individual formally declares that they are unable to repay their debt and undertakes a debt management plan, individual voluntary arrangement or bankruptcy, this will normally mean that some or all of their debt will never be paid. In such a situation, the creditors are unable to ask any third party to make good the debt.

It is worth noting however, that if debt repayments are missed or debt remains unpaid, then this situation will be recorded on the debtor's credit file. If you live with someone you know has debt problems then it is possible that the entries on their file will become mixed up with yours. The result will be that your credit rating may be affected. However, it is relatively easy to resolve this problem by contacting the credit reference agencies.

What if my spouse's IVA fails?

Liability for debts is still unable to pass to someone else even if the person who owes the money enters into an individual voluntary arrangement which then fails. The only time when this type of event could affect a partner or other family member is if there is a property involved.

If an IVA fails, then as a result the person who took out the arrangement could be declared bankrupt. If they are a joint owner of a property, this may then have to be sold to release their share of the equity so it can be paid to their creditors.

Can a third party ever become liable for someone else's debts?

Debt in joint names - It is possible to borrow money in joint names. This means that both parties agree to borrow the money and both are jointly liable for the debt. If one party is unable to continue to pay towards the debt, the other remains responsible for the payment of the whole debt.

Personal guarantee - There are occasions when a bank will not let an individual borrow money unless a guarantee of repayment is given by a third party (often a spouse or family member). If a personal guarantee has been given and the person who borrowed the money then fails to repay it, the bank will turn to the guarantor for repayment.

Nevertheless, in the absence of a joint debt or personal guarantee, it would extremely unlikely that a third party would become liable for another's debt or otherwise effected by it.

Steve Jackson is a debt adviser from in the UK. For more quality and unbiased information on Personal Debt Solutions, visit our website at

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