Marriage isn’t the only type of relationship that can become rocky because of bankruptcy or other financial troubles. Unmarried couples who cohabitate can also suffer from unexpected financial troubles including the bankruptcy of one or both partners. Often, when couples enter into a serious, but non-marital relationship, many financial matters become intertwined just like in marriage, especially if one partner is well-off while the other struggles financially. The better-off partner may co-sign for credit cards, auto loans or even purchase a house with their partner. But once a partnership breaks-up the financial fallout can be devastating even leading to bankruptcy. Here are a few tips on what you can do to protect yourself:
- Keep your finances completely separate. If your partner faces financial trouble such as creditor lawsuits, wage garnishments or even bankruptcy you want to make sure that your money is not affected.
- Don’t buy big-ticket things together, especially with a financially troubled partner. Avoid co-signing a car loan or purchasing a home together if your partner has not proven financially responsible. If your partner fails to make payments and files for bankruptcy you could be stuck paying the bill.
- Most importantly get legal advice and make sure you have some type of cohabitation agreement that includes written agreements about how debts will be handled in the case of a breakup and/or the bankruptcy or one (or both) of the partners.