One partner’s bad money habits can cause lasting damage unless early action is taken.
Bianca Hartge-Hazelman reporting in the Australian Financial Review.
Rising cost of living pressures due to higher interest rates are hurting women’s financial progress and increasing the risk of relationship debt.
Relationship debt arises either because debt is not disclosed at the start of a relationship or because one person has taken control of the finances and has accumulated debt that the partner doesn’t know about.
“We tend to see this happen in relationships when one person knows they already have a poor credit rating, so they pressure the other partner with a better credit history to go guarantor on a loan,” says Jasmine Opdam, solicitor and team leader of Redfern Legal Centre’s Financial Abuse Service.
She warns that rising cost of living pressures and higher interest rates are likely to lead to financial stress in relationships and trigger a spike in relationship debt legal cases.
“Where a relationship has broken down and one partner has gone guarantor for the other partner on a loan, the guarantor could find themselves facing the loss of their home, car or other assets if the loan amount including interest is over the $10,000 bankruptcy threshold,” she adds.
Their wages or bank accounts could also be garnished, and their credit report could be damaged.