After many years single I have met someone but he has about $50,000 debt with various debt agencies (he doesn’t know I know this). He also has a car about to break down for good. I will never sign anything with him but how else can I avoid his debt becoming my problem. I let him move in when his landlord asked him to move due to personal reasons (I found out later he owes $10,000 in rent). I am financially secure and enjoy his company and don’t mind he lives with me rent free but I need to be careful.
October 6, 2013
Asked by Anonymous, Public Servant, Newcastle, NSW
Hi and thanks for your question. As you no doubt realise, life is never straight-forward and you certainly have a few issues to consider which not only include financial matters such as possible STD’s (sexually transmitted debt) but also trust issues. It’s great that you are aware of your partner’s outstanding debt commitments but I’d have to ask how is it you came across this information and how would your partner react if he found out that you knew? Having worked with clients in similar circumstances, it doesn’t seem to be a very strong foundation for a long term relationship. There are many reasons for relationships to break down and in about 40% of cases the breakdown is caused by disputes over money.
If possible I suggest you both have a frank and open discussion about money and in particular, his financial affairs and how you feel about it. There may be very good reasons for the situation he’s in and talking openly about it might be the best approach. If he is evasive or reacts in a way that you are not comfortable with, then you may need to reassess the situation.*
Some things you might like to consider are:
- Protecting yourself –you’ve mentioned that you don’t intend to enter into any financial arrangements with him and this is very wise. For example, if you were to borrow money with him or become a guarantor, you would ultimately be responsible for the loan if he reneged or was unable to service the loan.
- Living with you rent free – if that suits you great but make sure he contributes to the household in other ways (eg doing the housework, cooking, shopping, gardening, repairs and maintenance etc).
- Working – if he isn’t working he definitely needs to start searching for a job. If he is receiving Centrelink benefits then these could be impacted if you are in a relationship and living together – you could be viewed as a “couple” and your income would be taken into consideration when determining his benefits.
Finally, if you believe this will be a long term relationship and you wish to protect your finances you need to seek legal advice in relation to drawing up a financial agreement. These are similar to pre-nuptial agreements and it’s much better to have an agreement or understanding in place at the start, rather than trying to address a problem after the fact.
Please note this is general advice and you should consider seeking personal advice. I hope this helps and good luck.
* please note that I am not a relationship counsellor and these views are my own :)
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Personal Finance Expert
Anne is the Partner and Managing Director at McPhail HLG Financial Planning. Anne is an authorised representative of Securitor Financial Group an Australian Financial Services Licensee, License No. 240687; ASIC Authorisation Representative Number 245962.