https://www.qms.space/ News en-US hourly 1 http://wordpress.org/?v=3.5.1 Am I Responsible for Someone Else's Debt? https://www.qms.space/blog/article/am-i-responsible-for-someone-elses-debt 22 April 2019, 4:10 pm Many people worry that getting married, being in a long-term relationship or the death of a spouse means they will be liable for their partner's debt. This is not the case, but there can be certain si...

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Many people worry that getting married, being in a long-term relationship or the death of a spouse means they will be liable for their partner's debt. This is not the case, but there can be certain situations where you agree to share or take on all the responsibility.

If creditors are demanding that you pay someone else's debt for them, it's important to check what your obligations are.

When am I responsible?

The most common reasons you will be responsible for someone's credit card debt, loan or other type of debt are if:

  • You signed a guarantor agreement – if you are the guarantor of someone's credit card or loan, you have agreed that the credit card company or lender will transfer their remaining debt to you if they default on their repayments.
  • You have a joint account – if you and your partner or another party open a joint bank or credit account, you will normally both share responsibility for the full debt, regardless of who contributed to it. Unless you sign the credit agreement alone, in which case you have full responsibility even if it's a joint account.
  • You opened an account for someone else in your name – it's never advised to sign up for a credit card or a loan using your own details if the account will be used by someone else, as they will have no legal obligation to keep up with repayments and you will be fully responsible.

How can I check?

If you're not sure whether you've signed as a guarantor or joint account holder, you can check with the lender whether the account bears your signature and anyone else's. You may also be accountable if you've made a written or verbal agreement to pay someone's debt for them.

You will be held liable for someone's debt as a guarantor or joint account holder if they default on their debt by missing payments or passing away. If your signature is not present and no other agreement was made, you won't be liable for any debt, regardless of the person's relationship to you or whether you used the account as an additional card holder.

A deceased person's assets may be repossessed to cover their remaining debt after death. If there is still debt remaining, this expires with the debtor and no further attempts should be made to recover it. You can't be held accountable for a partner's debt that was built up prior to your marriage.

What if I want to help?

If you decide that you want to help someone to pay off their debt, you can transfer money to them for that purpose or arrange for their debt to be transferred to you. This involves signing a guarantor agreement with the bank, credit card company or other lender. If they have already defaulted on their debt and it has entered collection, you can arrange to pay it privately.

You should think carefully and talk to a financial adviser before taking on the burden of paying someone else's debt. If you want to discuss your options to reduce debt with no obligation to continue, call Debt Fix's experts today on 1300 332 834.

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Should I Take Out a Loan to Pay Off My Credit Card? https://www.qms.space/blog/article/should-i-take-out-a-loan-to-pay-off-my-credit-card 8 April 2019, 4:19 pm Australians owe around $45 billion in total credit card debt. Many people are trapped in a vicious cycle of debt with cards charging interest as high as 20%.

If you're struggling under the weight of ...

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Australians owe around $45 billion in total credit card debt. Many people are trapped in a vicious cycle of debt with cards charging interest as high as 20%.

If you're struggling under the weight of debt, paying off your credit card with a personal loan at lower interest could leave you better off, but there are a few things to consider.

Advantages of a personal loan

Consolidating debt with a personal loan can instantly reduce the interest you're paying and avoid fees and penalties, as long as you can meet the monthly repayments. Some of the reasons to consider a personal loan are:

  • Lower interest – the interest rate of your loan will depend on your credit score, the loan amount and the lender you choose, but they are typically lower than credit card rates.
  • Unsecured – most personal loans are unsecured, meaning you don't have to put down collateral such as property or a vehicle. If you choose a secured loan, these usually have even lower interest rates, but there's a risk that the asset will be repossessed if you can't make your payments.
  • Fixed term – your loan repayments will be calculated based on the duration of the loan, so unlike a credit card that can trap you in spiralling debt, there'll be a clear end date, as long as you make your payments on time.

A shorter loan term will involve higher monthly payments, while a longer term will mean you pay less each month but more overall.

Is a personal loan right for me?

If you qualify for a personal loan with a good interest rate, you could have more money left over each month and feel less stress. However, this isn't an option for everyone.

Personal loans typically have a minimum loan amount of $1,000 or more, so they will only be an option if you have credit card debt in the thousands, unless you also need the loan for other reasons.

Your loan conditions will largely be determined by your credit score. So if you have bad credit, you may not be able to access a favourable loan.

As monthly loan payments are higher than the minimum payments on credit cards, you should calculate whether the term of the loan might mean you pay more in total than if you continued to pay off your card.

Try our free debt calculators

What are the alternatives?

Another option for consolidating your debt could be a balance transfer credit card, but these need to be used with caution. These offer a low introductory interest rate – often 0% APR – which means you can pay off the debt each month without worrying about it growing, at least until the offer period ends when they will revert to a high rate.

However, you may not be able to access a balance transfer credit card if you have poor credit. It might also not be a good idea to start using a credit card again if you've already had trouble keeping on top of your repayments in the past.

While a personal loan or balance transfer could be a quick fix, it's important to address the root cause of your debt problem to stop it from happening again. For confidential, no-obligation advice about how to get out of debt and what your options are, contact the Debt Fix team today on 1300 332 834.

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