QMY HUSBAND has been jobless for 10 months and can't meet many credit card payments. The banks have sent lawyers' letters to demand payment; some have served final reminders.
My husband is concerned that if he is made a bankrupt, the banks will come after me for payment. We share only one joint account.
I am self-employed and my income can be irregular. We live in an HDB flat and we are behind in our instalments. We have just enough for the next five to six months.
My husband says he was told that, if we divorce, the banks will not come after me, except for the jointly held account. Is this true?
A IT IS true that if he gets a divorce, the banks will not come after you. If the debts are solely his - for example, the credit cards and accounts are solely in his name - the banks can only look to him to settle, not you. They can come after you only if you were his guarantor, or if the account is a joint one.
You said only one account is held jointly, but you did not mention if this is a credit card account or a current or savings account.
If it is a current or savings account, the bank can take the money from the account to satisfy part, or all, of the debts owed. Thus, you might not wish to leave your life savings in that account.
If it is a credit line, overdraft facility or credit card account, then you and your husband are jointly and individually liable for the credit used.
I would suggest that you immediately withdraw your name from the account, if the bank allows you to do so. You and your husband can instruct the bank to freeze, with immediate effect, any line of credit on the account so your husband cannot incur any further debts on it.
You then need to pay the minimum instalments on time so the bank will not take action over the account. You can also pay off the debt in full and close the account to stop further action against you. This will leave only your husband's solely held bank accounts, which he is solely liable for.
If your husband becomes a bankrupt, his creditors can enforce payment in several ways. One would be to issue a writ of seizure and sale against the non-essential items in your home, such as computers and TVs. If you can prove - with receipts or credit card or bank statements - that you alone paid for the items, the creditors will be prevented from auctioning off the items.
With regard to the HDB arrears, you and your husband can tell your HDB branch office about your financial problems. They can devise a revised payment plan to let you reduce the instalments for a limited period; later, you will revert to the current arrangement. It is important to speak to your branch office so HDB will not take legal action against you for the arrears owed.
However, a divorce will not protect you against the debts of your husband unless they are debts that were incurred for the family, and the court issues an order that specifically states that you, the wife, will not be responsible for them.
The court grants such orders only if the debt is already in the sole name of the husband - for example, if he took out a renovation or study loan. The order will state that one party is solely responsible for the repayment of the debt.
A debt in joint names remains, under the law, enforceable against every party to the debt, jointly and severally (individually). Therefore, you need not seek a divorce just to prevent creditors from coming after you.
Lim Choi Ming
Partner
KhattarWong
Advice provided in this column is not meant as a substitute for comprehensive professional advice. E-mail questions to a1admin@sph.com.sg.
