How Can I Untangle Our Joint Debt And Protect My Credit After A Breakup?

Q: My partner and I lived together for six years and shared a chequing account with overdraft, a joint credit card and a car loan that I co-signed. We split up two months ago and I don’t know where to start untangling this. Whose debt is whose, how do I get my name off shared accounts and could my ex ruin my credit without me knowing? —Rosa

FP Answers: A breakup can be emotionally and financially complicated. Shared accounts and joint or co-signed debts remain joint whether you were married, engaged or simply building a life together. The good news is that with some practical steps, you can untangle them and protect your credit.

Start by making a list of every account and debt that carries both names. For a joint credit card, line of credit or loan, each borrower is responsible for the full amount owed, regardless of who made the purchases or how the two of you agreed to divide the payments. From the lender’s perspective, the signed credit agreement determines responsibility, not a private arrangement between former partners.

Contact each joint creditor as soon as possible to ask whether the account can be frozen while you work out a longer-term solution. Request written confirmation and keep any reference number from the phone call with your records. Acting quickly can prevent new borrowing for which you may still be responsible.

A lender will not remove a borrower’s name from a joint debt simply because a relationship has ended. To do that, you have three main options : pay off the balance together and close the account; have one person apply to refinance or transfer the balance into his or her name alone, subject to the lender’s approval; or, for an asset such as a vehicle, if someone can qualify on his or her own, arrange for that person to buy out the other’s share and assume the payments.

Order your credit reports from both Equifax Canada and TransUnion Canada and review them carefully. The reports are available for free and will show how joint accounts are being reported in your name. If your bank or credit card issuer offers transaction or account alerts, turn those on while any shared accounts remain open. Watch for unfamiliar activity and dispute anything you did not authorize right away. Remember that a missed payment on a joint account can affect your credit report even if your former partner was expected to make it.

Put any payment agreement with your former partner in writing. Record who will pay each debt, the amount and the due date, and keep copies of payments and correspondence. This can reduce misunderstandings, but it does not change either person’s obligations to the lender. If substantial debts or assets are involved, seek advice from a family law lawyer or local legal clinic about a formal agreement.

Property and debt division rules for common law couples vary by province. Before agreeing to divide significant debts or assets, speak with a lawyer so that you understand how those rules may apply to your situation.

As the shared accounts are closed, open a chequing account and any necessary credit accounts in your name only. Redirect your income and automatic payments, update your passwords and security questions and keep your new account information private. These steps give you control over your day-to-day finances and help you build a credit history that is independent of your former partner .

• I fear my parents, on CPP and OAS, could go into debt. How can I help?
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You do not need to solve everything in one day. Start by listing the shared accounts then call the lender that presents the greatest risk. A non-profit credit counsellor can help you prioritize the accounts and build a plan if you are unsure where to begin.

Mary Castillo is a Saskatoon-based credit counsellor at Credit Counselling Society, a non-profit organization that has helped Canadians manage debt since 1996.

Do you have a debt question for FP Answers? Email wealth@postmedia.com.