Joint debts after divorce…
If you and your ex-partner owe money that was originally borrowed in joint names, you have what’s called ‘joint and several liability’. This means that if your ex-partner can’t, or won’t, make repayments, you are liable for the full amount – not just half of it.
Divorce makes no difference to this. Even if the money was used to buy something that only your ex-partner benefits from, you may still have to repay the whole loan to the lender if your ex-partner doesn’t.
An exception to this rule is credit cards. If someone has a credit card and they get another card issued so a family member can use their account, the first cardholder is responsible for the whole debt – ‘additional cardholders’ do not have any legal responsibility to make repayments.
What about mortgages?
If you and your ex-partner took out a mortgage in joint names, you are both liable for the full amount of the mortgage. The lender could demand repayment of the whole lot from either of you if you fail to keep up with payments.
This makes it vital that you and your ex-partner decide what you want to happen with your home in the long run. If neither of you wants – or can afford – to keep your home by yourself, you should still make mortgage payments while trying to sell it. If you miss a payment, or you’re late with it, it will affect your credit rating and you could find it difficult to get another mortgage, or any other type of credit.
You could even end up having the property repossessed. If you’re struggling, talk to your mortgage lender about the situation – they may be willing to find a way to make the repayments more affordable.
What to do
With any joint debts you have, whether a joint bank loan, overdraft or mortgage, you are each liable to repay the whole amount.
This means that if your ex-partner doesn’t want to pay their share, the bank or building society may ask you to make all the payments. Contact them to tell them you’ve split up and see if you can:
- Put some restrictions on the account so your ex can’t run up further debts; or
- Reach an agreement so they accept lower payments if you can’t repay in full
Making an arrangement with your ex-partner
If you have a joint loan or mortgage with your ex-partner and the bank won’t let you separate the loan, you should try and agree with him or her how you will repay it.
Because both of you are liable to pay off any joint loans you have, it could affect both your credit ratings and your ability to borrow in the future if one or both of you doesn’t keep up the payments. You may want to:
- Agree with your ex-partner that you will continue to make payments from a joint account
- Sort out an arrangement so one of you agrees to pay the bank or loan company but receives a contribution from the other. If you go for this option, try and agree to set up a standing order for the payments to or from your ex-partner. That way you know they’ll be made regularly
- Pay off your joint loan and take out another one in one of your names. This is only likely to work for you if the partner taking out the loan in their name has a good credit rating and can afford to make the repayments
There’s more information about credit rating on The Money Advice Centre’s website – How your credit score affects the cost of borrowing.
What to do if your ex-partner won’t co-operate
Sometimes, couples who are splitting up make arrangements for their finances with the best of intentions, but they just don’t last.
It could be because you or your ex-partner’s financial position changes (maybe one of you loses your job), or because your break-up becomes much more acrimonious.
If that’s the case, try and keep the bank or lender informed. If you don’t think they are dealing with you fairly, you can complain to the Financial Ombudsman Service.