When we think of abuse, it’s normally physical and emotional abuse that comes to mind. But many of us may not be aware of another kind of abuse; one that is extremely common: financial abuse.
Financial abuse of a partner/spouse or senior can take on many forms, from the seizure of your paycheck or pension, to credit card or loan abuse. It’s also often a covert form of abuse – the abuser may prey upon your kindness to obtain money from you. At first you may not even be aware this type of abuse is occurring – often until it’s too late to reverse the effects, or to put a stop to it.
It’s essential you take steps to protect yourself from financial abuse. Let’s take a look at a few of the ways an abuser could financially harm you:
Control over your bank account
Financial abusers will often demand you turn over your paycheck or pension to them when you receive it. Or, if you have direct deposit, remove the funds from the bank account as soon as they are deposited.
Joint accounts are a dangerous arrangement that I strongly caution against. Yes, they’re convenient for things like dealing with the banks and utility bill payments, but you can always arrange a separate main bank account for yourself and transfer funds electronically into a joint “holding account” as bills come due.
Co-signing a loan
One financial abuse strategy I see employed frequently, is the abuser who asks the person to co-sign a large loan, line of credit, credit card account or car loan. Then the abuser uses the funds, maxes-out the credit cards (or vanishes with the vehicle), leaving the cosigner responsible for all the debt.
My advice to you about joint or co-signed debt is this: don’t have any (if possible). If you share a credit card, bank loan, or line of credit with your spouse or family member, reduce your liability by having a low credit limit or – even better – removing yourself, or the other person, from the contract.
Destroying your credit rating
When financial abuse takes place the person who is responsible for the debt (in most cases, the victim) can also experience serious damage to their credit rating. This means you will have a great deal of difficulty obtaining your own credit when you need it. Many people have had to file personal bankruptcies or consumer proposals with my firm to protect themselves from their creditors, after financial abuse has taken place. That means their credit rating takes years to be rebuilt before they can once again obtain credit on their own.
Keeping cash and debt separate in a household
By now the picture should be clear: if you share a debt, you share the responsibility for that debt. By keeping as much of your debt (and your income) separate in your relationship, you can avoid financial problems later on.