Debts from a Divorce
Dealing with debts from a divorce is not a pleasant experience for anybody. It will usually lead to disagreements and arguments on who paid for what, when where and how between you and your ex-partner.
If you are struggling to come to agreement there are a few simple steps to help you through the difficult times and rectify the situation;
- Understanding the laws when going through a divorce is a must so be prepared to speak to a solicitor, even well before things get messy. Most solicitors will provide a free 30 minutes for you to explain your situation and to see if you can help. If you want any quick questions answering you can try www.lawanswers.co.uk
- Make a list of all debts owed and to which companies or people, both joint and separate. Include all information from account number to balance etc.
- Keep any personal debts separate, don’t confuse the issue or try to offload them onto your ex-partner.
- List you debts in order of priority, i.e. Mortgage, Council Tax etc. It is important to realise which are priority debts and which are not. Allways pay you government debts and your mortgage and bills etc to keep a roof over your head. If you ignore your priority debts you could be putting your house at risk if you are not keeping up repayments.
- Usually, when the debts are divided up, the solicitor could suggest that the person who earns more would pay off more of the debt. This is dependant on circumstances though as would only be decided by a court or solicitor after taking a financial statement from both parties.
- If any debts can be paid off immediately this should be done straight away to avoid further interest and charges being accrued. Examples would be credit cards and loans or even the mortgage when you sell the house.
- Consider each person's overall situation. If one party wants to keep the car for example, they would more than likely take over any debt that you might have incurred from buying the car.
- Try and be rational with each other. Shouting and arguing wont get you anywhere. Be reasonable and split your debts accordingly in a way that burden either of you.
- If the situation is getting bad, speak to a professional debt advisor who could look at consolidation loan options for both of you. This could be in the form of a Debt Management Plan or IVA.
- Obtain a copy of your credit report if you are struggling with consolidation options. These can usually be obtained for a small charge, usually £2, from any of the 3 major credit report companies. www.experian.co.uk, www.equifax.co.uk or www.callcredit.co.uk
- Speak to a solicitor about having a written agreement drawn up to split the debt evenly after divorce. There may be a charge for this but it may also save you a packet in the long run if things get nasty.
Joint accounts can be very difficult to deal with if you have one with an ex-partner. Situations can arise where your partner might be spending the money out of the joint account and you feel there is nothing you can do. You are both liable for this debt no matter who spends it so if this is the case you should contact your bank immediately, explain the situation and request the account be frozen. Usually the bank will require a signature from both you and your ex-partner to proceed with any action on the account but in extreme circumstances like this example, The bank will have to step in and do something as if debts are being run up it will be affecting your credit rating.
Seek further advice
Divorce is never an easy to get through but protecting your finances is vital for the both of you. Even if things are going well, seek advice from a solicitor and Debt Advisor immediately as the situation is likely to be volatile and an agreement between you and your ex-partner one day could turn into an argument the next. Keep an open mind and be ready to handle unexpected issues.