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Sexually Transmitted Debt

Don’t get stuck with your partner’s debt!

What is it?

Sexually Transmitted Debt is where one person in a relationship becomes responsible for their partner’s financial debts usually after being convinced or misled into taking on debt in their own name, sharing the responsibility, or taking on more risk than they knew about.

In many cases a lender will ask for a second signature, even though the loan is for the primary borrower say for his business, his car etc. The lender is only doing it to spread their risk, however if the loan is sound, there should be no reason for it. This can place pressure on the primary borrower to coerce a partner or even trick a partner into signing a loan document as a ‘witness’ but it really meant signing as a co-borrower. That can result in unwittingly becoming fully responsible for the whole debt if the initiating borrower decides to stop paying the loan.

Women are often vulnerable to STD as they can feel obligated in the relationship to support their partner in debt, or if there is power and control exerted by partner, they may feel compelled to sign for something they are not happy to. It’s a difficult area as relationships are meant to be based on trust and believing the best in your partner. But equally, the financial risks are great if the relationship breaks down or one partner takes advantage of the other. Sadly it happens all too often. One partner - usually the woman - is left with all the debts and no assets when a relationship breaks down or a business fails and banks want their money from the co-borrower.

Ideally, partners sharing finances need to be fully open, informed and aware of all financial information and understand the risks and implications of any loan agreement. If one party is going to derive little benefit from the loan, ideally encourage the primary borrower shop around to get a loan in their own right. Get independent advice from a financial counsellor before committing to anything.

Common examples

  • Taking out a loan on behalf of partner

    Partner can’t get car loan due to poor credit record, so loan is taken out in name of wife. But the car is registered in husbands name. If he leaves and takes the car, wife is left to pay the loan

  • Unauthorised Mortgage Drawdown

    one partner accessing money from mortgage drawdown without their partners consent

  • Misuse of funds

    She had been giving him money to pay joint bills/debts but he spent it on other things

  • Joint Credit card spending

    spending without consent on a partner’s joint credit card

  • Family home /assets at risk

    Wife’s share of asset at risk due to husband’s gambling problems or bad financial management

How to protect yourself

  • Share Information and keep informed

    Partners sharing financial matters need to both be fully aware of financial matters – reading statements each month, understanding what money is being spent and where. Having just one person in control makes the other partner vulnerable. Both partners should have visibility of all accounts.

  • Don’t sign anything on the spot

    Read all contracts carefully and get independent advice before signing anything you don’t fully understand.

  • Joint Accounts / Separate Accounts

    Ensure joint accounts require ‘both partners to sign’ for transactions.
    Keep one bank account separate, to ensure each partner has access to money of needed.

  • Understand joint debts

    Understand that you are held 100% liable for a joint debt if payments are not made. A lender can take action against either party to pay back the full amount.

  • Understand your partner's business

    Keep informed about your partner’s business, and monitor the statements.

  • Register a car in the right name

    Cars should be registered in the name of the real owner; that is the person who is financially responsible for the vehicle or loan.

Key Contacts

Consumer Action law Centre
Phone: (03) 9670 5088

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