'Sexually transmitted debt' is debt you become liable for because you’re married or in a de facto relationship.
Often, this liability comes without either your knowledge or agreement.
Here’s an example. Justin and Sonia have been in a relationship for nine months. Justin wants to buy a car, but he can’t get a car loan because he has a poor credit rating. He asks Sonia to take out a loan in her name and she agrees. But Justin registers the car in his name only. So six months later when they break up, Justin keeps the car but Sonia is left to repay the loan.
How can you protect yourself?
It’s important to talk openly to your partner about your finances so you’re not taken by surprise if you break up. If your partner has accumulated lots of debt, and you don’t think you should be liable for it, you will need to show evidence that the debt:
- was incurred unreasonably
- was a result of your partner’s reckless or negligent behaviour
- won’t need to be repaid, such as loans from family.
Here are our top tips to avoid STD
- Think carefully before you guarantee for a loan or a credit card. Understand what your obligations are because if things go pear-shaped and your ex can’t repay the money, you might have to. In the worst case, this could put your home at risk if it’s been used as security.
- If household bills are in joint names and you break up, make sure you tell your providers immediately because if your name is on the bills, you’ll be liable.
- If you have a joint mortgage and you split up, it’s a good idea to advise the bank.
- Finally, don’t agree to or sign anything without getting legal advice. Signing papers you don’t understand doesn’t reduce your liability.
Considering a joint bank account?
Opening a joint account is a decision to think about very carefully. Here are some things to consider before you talk to the bank:
- Ask yourself why you are opening the joint account? Do you trust the other person completely, even when things get tough or go wrong? Do you have similar goals and spending habits?
- Work out your shared budget and who will pay for what. Make sure you agree where the money will come from e.g. which account or credit card, so both of you are on the same page.
- Research accounts from various institutions and check the fees very closely.
- Consider putting one salary into a savings account to earn interest, and the other into an everyday account to cover living expenses.
- You may also want to also have separate accounts for personal spending or saving.