Consumer credit: Obtain the cancellation of the co-borrower during a separation
When buying a property through a consumer loan, many couples borrow together: they are called co-borrowers. This solution facilitates the management of expenses in a couple, but what happens in case of separation? As a general rule, the couple does not wish to continue repaying the credit jointly, but prefers to cancel one of the co-borrowers.
Consumer credit: borrow from two
If the purchase of real estate on credit is very often done to two, it may be the same for other material goods such as a car, furniture or for financing work. It’s easy to borrow as a couple:
- For people married under the community property regime it is automatic. Purchases funded through credit belong to the community.
- A couple can take out a consumer credit together, the property will belong to them jointly if they both sign the sales contract. And even if the concubines, married or partners of Pacs do not fund the property equally.
However, before borrowing jointly, it is important to know the obligations to which the signatories are subject. To borrow from two is to be financially supportive: if one of them can no longer pay, the co-borrower will have to repay the monthly payments for the couple.
Separation and its consequences
Couples projects financed on credit can be interrupted in the event of separation. The steps differ according to the type of union.
Married couple: divorce
A couple who wishes to divorce the obligation to have this decision taken by a judge for family matters in a high court.
90% of married couples are under the community of property regime, which means that they have not established a marriage contract. In this case, the couple’s property belongs to both. We must share everything:
- If the spouses choose a divorce by mutual consent, they decide for themselves the distribution of the property;
- If this is not the case, it is up to a judge to arbitrate the distribution.
For couples who have married under the separation of property regime, everyone takes back what belongs to them. Only property acquired by two must be shared.
The rupture of PACS
More and more French people are choosing to pacser: he signs about 170,000 each year for 240,000 marriages. To terminate a PACS, the couple must send a letter to the registry of the court that had instructed the PACS. The break can be on a joint decision or unilaterally. If no particular condition is specified in the PACs convention, the union is then made under the regime of separation of property. All property acquired before and after the Pacs is the sole property of its buyer. However, in case of separation, if one of the couple can not prove that he owns a property then the one is declared as belonging to both and must be shared. Some couples have chosen to unite under the indivision regime. All assets acquired after the Pacs belong to both and must therefore be divided between the couple in case of separation. However, property acquired before the Pacs, by donation or inheritance tax, is not subject to indivision.
In case of separation, cohabitants themselves organize the distribution of property. Everyone takes what belongs to him. To facilitate this step, it is important to refer to purchase invoices to know who financed what. If the cohabitants share a joint account, the property acquired with this money are considered as indivision. Fair sharing must therefore be done during the separation.
Separation: the cancellation of the co-borrower
What about current credits contracted at two? There are several solutions for canceling the co-borrower guarantee in the event of separation.
- The couple may choose to repay the loan in advance, by selling the property for example. Thus, the consumer credit no longer exists and the two former spouses are no longer solidary in its repayment;
- The couple can apply to the lending institution and request that the credit be transferred to a single borrower. The lender is not obliged to accept. It is necessary that the borrower can prove that he will be able to repay the monthly payments alone. To make it easier for him to buy from the co-borrower’s credit, he can use credit consolidation. This solution makes it possible to adapt monthly payments to the new financial situation.