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The general rule – the Property (Relationships) Act 1976 does not affect the rights of creditors

The general rule is that the Property (Relationships) Act 1976 does not affect creditors’ rights to get money they are owed. There are limited exceptions to this rule.

A creditor’s rights against a partner, or partners if the debt is in both names, will depend on the terms of the credit agreement. This says how a creditor can recover the debt if a partner stops repayments. A creditor usually has the right to repossess property bought on credit, or sell property that has been given as security for debt, as in the case of a mortgage on a family home.

There are good reasons why the Property (Relationships) Act 1976 should not affect creditors’ rights. Creditors will usually provide goods or services to one or both partners. Partners get the benefit of having those goods or services on credit, or are able to buy a house they could not otherwise pay for.

It could be unfair if creditors’ rights were affected when couples separate or if one partner dies. If the law changed so creditors had fewer rights, it is also likely that they would change the way they gave credit. It could be more difficult to get credit or people might end up paying more for credit.

However in some circumstances, it may be unfair that creditors’ rights take priority over a partner’s rights. In one case, a bank’s right to sell a mortgaged house to recover a debt took priority over a partner’s right to live in the house even though she had been given that right by the Family Court.

What do you think?

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