Private Lending – How to Avoid Responsibility if Your Partner Owes Personal Debts

By:Shanghai Ganus Law Lawers Xuhui, Shaodan – Economic Disputes TeamDate:2017-07-17

I    Abstract 

The Court will decide whether the debt is classified as a personal debt or a couple’s joint debt in accordance to a combination of societal standards, logical reasoning, and life experience.

In normal circumstances, the debts will be joint debts if occurred during a marriage. However, if both parties of the relationship did not agree to the joint debts, and they do not share benefits with each other, then with ample evidence, the debt will be termed as a personal debt.

II   Facts


The Plaintiff Bai Youjun and the Defendant Zhou Silian were friends. In July 2014, Bai Youjun, Zhou Silian, Gan Shihong, Zhouhong, Gao Xiaolian, Wucui, Gongmin gathered together to opened business. On 26th July, the Defendant lost a couple of hundred thousand, After the Plaintiff paid the deficit for the Defendant using cash, the Defendant provided the Plaintiff a loan receipt at RMB 100,000. After which, the Defendant only returned part interest, but not a single cent of the main debt. On 19th January 2016, the Defendant provided a new loan receipt for the Plaintiff. Upon investigation, the Defendants Zhou Silian and Mao Diping married in October 1987. Apart for Zhou Silian’s short venture into business in 1997 to 1998, she does not have a stable income. The couple does not have a good relationship as Zhou Silian had gambling problems, since 2011 the Defendants rarely stay together.


III Court Decision 

The Court should use a combination of societal norms, logical reasoning, and life experience to reach a decision.


In order to determine whether the debts occurred during a marriage should be considered personal debt or joint debts should be determined on the two standards below

(i)                 whether the couple had common intention for the debt to be joint debts;

(ii)               whether the couple shared the benefits arising from the debt.


The RMB 100,000 as stated by the debt receipt is a considered a large amount of money. From normal circumstances, couples would have treated such amounts of debts with upmost care, as it is clearly not a situation of normal spending whereby a single party could determine alone. From that reasoning, if the debt were to be seen as joint debts, the decision would have been made by both parties.


In reality, the two Defendants had been staying apart for a long time, they have a rather rocky relationship, the Plaintiff could not show evidence that both Defendants had the common intention to treat the debt as join debts. Also, there was no evidence that the Defendant Mao Diping and Zhou Silian had enjoyed the benefits or had channeled the money into their life together. Therefore it cannot be concluded that the debt should be a joint debt to be borne by either party within the relationship. From a societal point of view, it cannot be seen that the Defendant Zhou Silian had been acting as an agent for the household.


Although the Plaintiff and the Defendant had been friends, and were willing to lent huge amount of money to each other, it shows a closer relationship, hence should be familiar with the Defendant’s relationship with her husband and her financial status. Knowing that the Defendant has a foul relationship with her husband and that they do not stay together, the Plaintiff should recognise that the Defendant would not be representing the debt as joint debts, but rather as a personal debt.

Additionally, the Plaintiff had inconsistencies in her descriptions. The Plaintiff could not show evidence that the debt was used as a personal debt for household expenditure, we can conclude that the Defendant did not use the money borrowed for such purposes, but rather on personal expenditure, and Defendant Mao Diping did not have a share in any of the benefits from the borrowed money.


IV  The Law

According to Law, if the Creditor were to be sued as an individual within a marital relationship, to determine whether the debts were to be considered joint debts or personal debts, the Law will look to [Marriage Law] Clause 24. If the Debtor’s partner can provide evidence that the couple has not been living together, then that party will not be responsible for the debt.

V   Legal Analysis by Lawyer

From this case, we can conclude that even if a party in a marital relationship were to have debts, it would not automatically be termed as joint debts. However if the innocent party in the relationship wants to avoid responsibility, that would not be an easy feat, ample evidence needs to be provided for the Court to agree.

The following standards should be looked into

(i)                 whether the couple had a common intention to see the debt as common debts;

(ii)               whether the couple had enjoyed the benefits derived from the money borrowed;

(iii)             whether the Creditor knew the actual personal life of the Debtor, the uses of the money borrowed, whether the Debtor had malicious intentions etc.

In order to prove the above, actual evidences are needed to show that the couple are on bad terms with each other, that they have been staying separately, that they are financially independent, and that the other party knew etc.

The judge will then decide based on a combination of societal standards, logical reasoning, and life experience.

Ganus’Value:Lawyers are guardian angels rather than business partners.

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