What is sexually transmitted debt and how do you avoid it?

What is sexually transmitted debt?

It is more common than you think – it is when an individual becomes responsible for their partner’s financial debt. More often than not this is bad debt – meaning it’s not secured against an asset.

This can leave you financially crippled, often with tens, if not hundreds of thousands of dollars of debt you need to repay. It can affect your credit rating, your bank balance and, of course, your financial goals.

As a financial adviser, I have seen many people shocked and bewildered when they discover the person they once adored and thought would never hide anything from them, has left them in financial ruin.

How does it happen? Here are some of the most common ways people end up saddled with their partner’s debt:

1.    Taking out a loan in a partner’s name

Often, one member of a couple will ask for help to put a personal, car or business loan in their partner’s name. This might be because they don’t have a good credit rating, they may not have an income to support the debt, or perhaps they already have considerable debts. Never take on a debt that isn’t yours.

2.    Unauthorised mortgage drawdowns

You may have been making additional repayments, have funds sitting in an offset account, or the value of your property has gone up, leaving you with additional equity. Your partner can apply for an increase in the loan amount. Funds are taken without consent or authorisation from the other party.

3.    Spending from a joint bank account or credit card

Amounts get taken from your joint account. Often this can start small and then grow to large amounts including unexplained cash withdrawals or use of a joint credit card without any discussions prior.

4.    Missing funds

Funds that have been allocated for scheduled bills, school fees or an upcoming holiday go missing, without any prior consent.

How to avoid STD

Money is one of the major causes of relationship breakdowns, with over a third of people saying they have fights about money regularly. So, it is important to sit down with your partner and have an open and honest conversation about money matters, what’s important to you and your partner, what goals you have and that you are on the same page. And also to be up to date as to where your financial situation is as a couple and individually.

Regularly discussing money sounds boring but actually, if it enables you both to live a happy, fulfilled life and achieve big life goals together, why wouldn’t you?

New relationships can be exciting but when you take that big step and commit to moving in together, you need to know what you are getting yourself into financially. If you aren’t fully across each other’s financial worlds yet, make sure you do and ask if they have any debt. If so, what’s it for and what’s their repayment strategy? Make sure that they are responsible for this debt and you are not taking on a commitment you cannot afford.

If you currently have joint accounts or assets with your partner, make sure you’re both clear on what the money should (and shouldn’t) be used for. Take time to get across your transactions in any joint accounts.

Get joint signatories for large withdrawals or loans you have and make sure you know to access them. You are liable for all your joint debt so make sure you know what exactly it’s for and have a repayment strategy to clear the debt and reduce your risk.

If your partner has a business, ask them about the business’ health and review financial statements.

Never sign anything you don’t understand. Don’t be bullied into ‘showing your love’ by putting any new loans/credit cards/buy now pay later accounts into your name. If they really love you, they should never put you in that situation.

Have your own account. I believe, everyone, no matter how long you’ve been together or how much you adore them, should have an account of their own. This should contain a few months of expenses that can’t be accessed by anyone else.

If you end a relationship, make sure your name is off the lease (assuming you rent), call your mortgage provider and tell them you have separated. Make sure you reconfirm you do have joint signatories to take out funds or to be able to redraw or close the loan whilst you get a financial agreement for your property settlement, take your name off utility accounts. Make sure you update your super and life insurance beneficiaries and get your will and estate plan redone.

Get legal advice. Find someone who specialises in this area. Find out their fees and engage them as quickly as possible to see what options you have.

If you can implement the above, you have put yourself in the best possible position to avoid an STD in the future!