Generally speaking, you are not liable for your spouse’s business debts in the UK unless you are a partner in the business or you have signed a personal guarantee for the debt.
Just being married or in a domestic partnership doesn’t’ automatically make you responsible for your partner’s business debts and obligations.
If you have signed a personal guarantee for your spouse’s business debt, you are also personally liable for the debt. This means that creditors can pursue you personally for the debt, even if the business itself cannot pay and your spouse is unable to pay.
If that is your situation, it’s time to seek prompt, professional advice to understand its implications. Please reach out to our licensed experts via live chat, email, or 08000746757. The first call is always free and without obligation.
Instances When You Could be Liable for Your Partner’s Debts
In general, you are not liable for your partner’s debts unless you have co-signed a loan or other credit agreement with them. However, there are some exceptions:
Business partnerships: If you are in a business partnership with your spouse, you are jointly and severally liable for all debts incurred by the partnership. This means that creditors can pursue either or both of you for the full amount of the debt, even if only one partner was responsible for incurring it.
Sole traders: If your partner is a sole trader, their business debts are considered personal debts. This means that creditors can go after their personal assets, including jointly owned assets, to satisfy the debt.
Co-signed personal guarantees: If you co-sign a personal guarantee for your partner’s loan, you are liable for the debt if they fail to repay it. This means that creditors can pursue you for the full amount of the debt, even if you did not receive any of the loan proceeds.
Joint accounts and mortgages: If you have a joint bank account or mortgage with your partner, you are both jointly and severally liable for the debt. This means that creditors can pursue either or both of you for the full amount of the debt, even if only one partner was responsible for incurring it.
It is important to note that joint and several liability means that creditors can pursue either or both partners for the full amount of the debt. This means that even if you were not responsible for incurring the debt, you could still be held liable for the full amount.
If you are concerned about your potential liability for your partner’s debts, it is important to talk to a financial advisor. They can help you understand your legal rights and options and develop a plan to protect your assets.
“My Husband Signed a Personal Guarantee”: What Should I do?
If you need help understanding the best way forward for your company, use the live chat during working hours, or call us on 0800 074 6757. We’ve helped thousands of directors through difficult financial circumstances, including those involving personal guarantees.
Our team will provide you with a comprehensive assessment of your situation and explore all available options to protect your personal assets while finding a resolution for the company’s liabilities.
References
The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.
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