Share your debt responsibilities

22 August 2011

When you are setting up a flat or moving in with your darling, you are going to have to talk money. It’s not all about cosy evenings watching a DVD and sharing popcorn, there is the serious business of keeping the electricity on and the rent paid.

And it’s important to share those responsibilities out. Not just for paying for them, but also for having your name on the contract. Because it’s the person on the contract that legally has to get the bill paid.

It’s horrible to think about, but sometimes living relationships don’t work out. And you don’t want to be stuck with the lease, electricity bill, internet account and the credit contract for the fridge and TV.

Try to share them out evenly between both partners or each flatmate. If a flatmate moves out, the new flatmate takes on their responsibilities. If someone already has a bad credit record then that’s a bit of a warning.

You might think you solve the problem by putting everyone’s name on all the contracts. Depending on the terms of the contract this may mean you are all individually responsible for all the debt. That means if your flatmates disappear, the company can still ask you for all the money, which means you are left chasing those flatmates for their share. Good luck.

If it’s your partner that has a bad credit record then this is a chance for them to improve that by taking on some responsibilities. It is also a good hint that you shouldn’t take on any debt for them. Until your combined credit record improves you can avoid debts by choosing pre-pay options, saving up for household items or buying second-hand.

It’s a good idea to check your own credit record to make sure it’s correct, especially if you are worried that someone has been getting loans in your name. You can check your credit record for free and you have the right to get information corrected. Your credit record is held by credit reporting companies such as Veda Advantage (www.veda.co.nz) and Dun and Bradstreet (www.dnb.co.nz).