Average Claim £3,000
We'll tell you straight away what you're owed
No hidden costs
All aftercare included
Free to enquire
It's free to find out if you have a claim
Wednesday 4th January 2023
What's it all about?
This article's designed to help you:
No one wants to think about the money they owe when they’re going through a tough time in their personal lives. Sadly, though, around 2 out of every 5 UK marriages end in divorce – and a lot of those wind up lumping people with some severely messy finances to clean up. Most divorces happen while couples are in their early forties, which is a time in your life when you’re often dealing with some pretty hefty debts already. Yes, your kids might be leaving home about now, but there’s very little chance you’ve paid off your mortgage yet.
The thing is, when you’re stuck in the middle of a divorce you’re probably going to be dealing with a lot of complicated laws and regulations. When there are debts involved, getting everything settled correctly can make all the difference between a clean break into the next stage of your life and dragging the weight of your past along with you.
With all that in mind, let’s take a look at how you can make the best of a difficult situation.
Romance and fairy tales aside, the truth is that a marriage is a pretty complicated financial and legal arrangement between you and your partner. That means it can be tricky to unpick it all neatly if the sky falls in. If there are personal or household debts involved, it’s critical to sort out exactly who legally has to shoulder them. There might be joint accounts and credit cards to consider, for instance, or loan and mortgage repayments to keep up. Those debts don’t magically go away just because you’re no longer married. If your name’s on the agreement, you’re still at least partly responsible by law for paying off what’s owed – even if you’ve got some kind of informal understanding about it with your ex-spouse.
There’s another side to that coin, of course. Even if you’ve been stumping up for your partner’s debts for years, if those debts aren’t actually in your name then they’re not automatically yours to carry after a divorce. When you go through the official divorce process, this is something that the court will look closely at.
Simple so far, right? Well, maybe not. You see, the court will have to weigh up a lot of complicated factors when deciding how your household finances get settled. It’s not always as cut-and-dried as looking at whose name’s on an agreement. For instance, if one of you has run up a debt for something that both partners have benefited from during the time you were married, factors like that can play heavily into the final decisions about who owes what.
Of course you do! Get a grip on your cash with our free money saving tips, guides and videos sent straight to your inbox. What have you got to lose?
It can be difficult to untangle yourself from joint debts when you’re getting divorced, particularly big loans and mortgages. After all, a lender’s not going to want to let you off the hook just because your marriage ended. Depending on your lender and situation, you might be able to arrange to separate the terms of a joint loan, but it’s not safe to count on that being possible or practical. The better solution, awkward as it might feel, is to talk it over with your ex-spouse and agree on a fair way to handle the repayments. You’re in each other’s hands a little bit here, since if the courts decide you’re jointly responsible for paying off a loan you can’t simply wash your hands of your ex-partner’s share of the repayments. If they fall behind on coughing up what they owe, it’s not just their own credit rating that’s being put at risk. As unfair as it sounds, even paying your end of the loan reliably isn’t enough to protect you if your former other half doesn’t do the same.
It’s worth remembering that you’re not fighting against each other here. It’s in both of your best interests to tackle your joint debts responsibly. You might decide to open a joint account to make the repayments from, for example, or for one of you to pay the whole amount and get the other to reimburse them for their share with a standing order. It’s up to you both to decide how to handle things, but it needs to be done properly and cooperatively if you’re hoping to keep clean credit ratings for the future. If it looks like there’s going to be a problem for either of you, it’s worth getting in touch with your lender as soon as possible. You might be able to sort out an easier payment schedule with them.
Divorces can be incredibly stressful, and there’s a strong link between debt and mental health problems. Remember, it’s not just your financial well-being at stake here. Take a look at our other guide, Mental Health and Finance, for practical ways to look after yourself when debts are looming.
As far as protecting your money goes after a divorce, there are a few simple step you can take to make things a lot safer for you both. One of the most important is to protect all your legal rights involving your home. Unless your divorce was an extremely amicable one, you’re unlikely to both end up living under the same roof. Depending on your situation, you might want to look into changing the ownership of the property, or ‘registering your interest’ in it if your name’s not on the mortgage – which would at least mean it couldn’t be sold on or re-mortgaged without you knowing.
Of course, there’s nothing preventing you from continuing to own the property together, even if only one of you is using it. The trouble is, if you were to die, your ex-spouse would almost certainly end up inheriting the place outright – which is something you may or may not be happy with. Explaining your situation to your mortgage provider is a smart move however things end up. Again, remember that paying off joint loans like this remains the collective responsibility both ex-partners in a lender’s eyes. You don’t suddenly only owe half as much just because you got divorced. If you’re renting, you’ll obviously want to talk your landlord through your change in circumstances. Again, depending on how you’re fixed, you might decide to get one of you taken off the agreement.
Next, you should think about any other joint finances you share with your ex. Talk to your banks, lenders and providers to set up arrangements to protect you both. For instance, you could change the terms of any joint accounts so that neither of you can take cash out without the other’s permission. If you’re getting your income paid into an account your ex has access to, you’ll probably want to change that, too.
Finally, you should get your credit report altered so it’s no longer tied to your ex-spouse’s. Being married doesn’t necessarily create a ‘financial link’ between you, but if you’ve bought or rented property together or set up any joint finances then your ratings can affect each other. To cut those ties, you’ll need to talk to the credit reference agencies and provide proof that your finances are no longer linked. You can read more about credit scores here.
Keep checking back here for more money tips and updates. We’re experts at saving you cash and we’re always here to help. That’s the reason why you’re better off with RIFT.
RIFTPROD1 - Subscriber