The legal status of a couple, whether cohabiting or in a civil solidarity pact (PACS), has a direct impact on the financial obligations of each, particularly when it comes to repaying credit. Contrary to popular belief, these two forms of union are not treated in the same way by the law, and ignoring these differences can lead to complex situations in the event of financial difficulties or separation. Understanding who is liable to pay what is therefore fundamental for any unmarried couple. This article focuses on the rules applicable to unmarried couples, and complements our complete guide to paying off credit for couples.
Cohabitation: the absence of legal solidarity and its consequences
The Civil Code defines cohabitation as a "de facto union, characterised by a stable and continuous life together". It is a factual situation that is not governed by a contract. This absence of a specific legal framework is the starting point for all reasoning: the assets of cohabitees remain completely separate.
The most direct consequence of this principle is the total absence of legal joint and several liability for debts. Each cohabitee is personally liable for any debts they incur, including those for household maintenance or day-to-day living expenses. Case law is consistent on this point: the solidarity rules applicable to married couples do not extend to cohabiting couples. So if only one of the cohabitees takes out consumer credit, even to buy something that will benefit both of them, the bank can only take action against him or her to obtain repayment.
Is it then impossible to be bound together by the same debt? No, but this can only be the result of a voluntary commitment. Cohabitees may decide to be jointly and severally liable, for example by taking out a loan as co-borrowers. In this case, their obligation does not arise from their status as cohabitants, but from the loan contract that they have both signed. Article 1310 of the Civil Code is clear: joint and several liability cannot be presumed; it must be expressly stipulated. The mere knowledge by one cohabitee of the existence of a loan taken out by the other is insufficient to bind him or her.
The same logic applies to property acquired. A property purchased by a single cohabitee belongs to him or her alone. If they buy a property together, they own it jointly, generally to the extent of each partner's contribution as specified in the deed of purchase. If this is not specified, joint ownership is presumed to be 50/50. This situation is relevant for creditors: the personal creditor of a cohabiting partner cannot seize the other partner's share of an undivided property, but he can bring about a judicial division to pay himself out of his debtor's share.
The civil solidarity pact (pacs): a framework for solidarity
The civil solidarity pact is a contract. It establishes a legal framework for couples, more structured than cohabitation but less complete than marriage. Since the 2007 reform, the default system for civil union partners is the separation of assets. This means that, in principle, each partner retains ownership of the assets they acquire and sole responsibility for any debts they incur personally.
However, the PACS introduces a major exception to this principle in article 515-4 of the Civil Code, which establishes the joint and several liability of partners to third parties. This mechanism is very similar to that which applies to married couples, governed by Article 220 of the Civil CodeAlthough there are nuances. Solidarity means that creditors can claim payment of the entire debt from either partner, even if only one of them has signed the contract.
The conditions for solidarity
This joint and several liability is not automatic for all debts. It only applies to "debts contracted by one of them for everyday needs". The law excludes expenditure that is "manifestly excessive" in relation to the couple's lifestyle.
For loans, the rules are even more precise. There is no joint and several liability for loans, except in two cases:
- If they have been entered into with the consent of both partners.
- If they are for "modest sums needed for day-to-day living" and their cumulative amount, in the case of several loans, is not manifestly excessive.
The notion of a "modest sum" is assessed by judges on a case-by-case basis, depending on the couple's income and lifestyle. A loan to buy a washing machine may be considered modest, whereas a loan for a luxury car is unlikely to be. A lawyer may be needed to argue whether a sum is modest or not in the event of a dispute.
The scope of this solidarity
It is essential to understand that this solidarity only comes into play at the stage of the debt obligation, i.e. in the relationship between the couple and the creditor (the bank). It does not govern the final distribution of the debt between the partners. To fully understand this nuance, it is worth reading our article on distinction between obligation and contribution to the debt. Between them, the partners must contribute to the expenses of living together in proportion to their respective means, unless they have decided otherwise in their PACS agreement.
As regards the property regime, if the partners have not agreed anything, they will be governed by the regime of separation as to property. However, they may opt by agreement for the joint ownership of acquests. In this case, the assets acquired during the civil partnership, together or separately, are deemed to belong to them equally. This choice has important consequences for creditors, who can then seize all the undivided assets for a joint debt.
Dissolution of the PACS: what about repayment of joint debts?
The termination of a civil partnership, whether by joint or unilateral decision or by marriage, puts an end to joint and several liability for future debts. It does not, however, put an end to the debts contracted jointly and severally during the union. These must be repaid in full.
The question of recourse between the partners then becomes central. If, after separation, only one of the former partners continues to repay a loan taken out jointly and severally, what can he or she do? Article 515-7 of the French Civil Code provides that on dissolution, the partners shall proceed to liquidate their rights and obligations. One of the partners may then have a claim against the other.
In practical terms, if a partner has paid more than he or she was entitled to in terms of his or her contribution to living expenses (generally in proportion to his or her income), he or she can claim repayment of the overpayment from his or her former partner. Calculating this claim can be complex and a source of many disputes, relating to the classification of the expenses (living expenses or personal expenses?) and to the assessment of each person's ability to contribute during their life together. The assistance of a lawyer is often essential to put a precise figure on this claim and to assert it, either amicably or in court.
The form of union has legal and financial implications that should not be underestimated, particularly when faced with a commitment as structuring as a loan. For an analysis of your situation and to secure your commitments, contact our firm. Our lawyers specialising in credit law can work with you to defend your interests as effectively as possible.
Sources
- Civil Code: articles 515-1 to 515-8 (Provisions relating to civil solidarity pacts and cohabitation)
- Civil Code: article 1310 (Solidarity)
- Civil Code: articles 815 et seq (Joint ownership)
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