Debts and Divorce: where do you stand?

Agreeing to financial settlements during a divorce can be challenging. A frequently asked question from our clients is, what happens to debt? Whether jointly taken, in one name but taken for the benefit of the family, or personal debt from one party – here’s our rundown on where you stand.

Joint debt

If you’ve taken a loan, credit card or mortgage in joint names, both partners will have shared liability on the loan. That means you are both responsible for the repayments and if one person cannot pay, you would be responsible for repaying the debt. Should your settlement need to go to court, a judge will divide debts, just like any other asset. This will be in a way that is reasonable to both parties and any children.

Individual debt for the benefit of the family

Should you be in a position where you have taken on credit in your name, but it can be evidence that this was to benefit you as a couple, your spouse or your family, it will be assumed that this is joint debt. Unless proven otherwise, a court will likely consider that the debt accrued has been done so jointly, despite the name on the credit agreement. Naturally, the court can not change the name of the agreement, but it would be taken into account when dividing other marital assets or allowances.

Individual debt

If your spouse has debt that was incurred before you met, taken for their own benefit, such as hobbies etc. or was unknown to you and can be evidenced, it is likely that it would not form part of your settlement and would be up to your spouse to repay.

If you do not have debt in your name, but your spouse does, you can obtain a notice of disassociation that will remove your financial association with that person on your credit file. This is common practice with separated couples and can be carried out by a credit reference agency.

An experienced solicitor will offer expert guidance and knowledge on financial settlements, including debt. Speaking with a law firm to acquire the best advice for your situation is always advisable. Our team would happily talk to you if you have any questions or need advice on divorce or financial settlements.