29 May 2008
Cautious Approach to Relationship Debt Needed
Brokers should tread very carefully when looking at setting up credit facilities that revolve around personal relationships. This follows credit checking agency Veda Advantage warning “lovebirds” to be cautious before rushing into financial entanglements such as shared bills, or loan or credit arrangements.
“Relationship debt is a serious situation where someone becomes legally liable for their partner’s or a member of their family’s debts after the relationship turns sour,” Veda Advantage warned in a media release.
Speaking to AB about the issue, Excel! Home Finance mortgage broker Janet Lee said that brokers should use their conscience when dealing with clients who may potentially get into relationship debt.
CEO of Mortgage House Ken Sayer added, “If had two clients with varying financial baggage that chose to purchase a home together, I would suggest that the funds brought by each party to the purchase be reflected in the ownership structure. For example, if one partner is bringing two-thirds of the deposit, the property should be purchased as ‘joint tenants’ with the ratio of the deposit reflected when the ownership of the property is registered.”