Debt
Debt after a relationship ends
Joint debts remain joint regardless of any agreement between the parties, which is the fact that causes the most damage.
Separation produces a set of financial problems that people discover months later, when a debt they believed was dealt with reappears.
The fact that matters most
Joint debts remain the responsibility of both parties regardless of any agreement between them.
A separation agreement, a court order or a verbal understanding that one person will pay does not bind the lender.
Which means that if the other person does not pay, the creditor will pursue you for the full amount, and your credit file will record the arrears.
This is joint and several liability, and it is the single most commonly misunderstood point in this area.
What to do first
In order.
List every debt and identify whether each is sole or joint.
Contact each lender to establish the exact position and to notify them of the separation.
Close joint accounts where possible, or convert them to sole names — which requires the lender's agreement and an affordability assessment.
Remove authorised users from cards.
Cancel any joint direct debits and set up new arrangements.
Change passwords and banking access.
And check your credit file for accounts you do not recognise.
Financial associations
Which persist.
Joint accounts and joint credit create a financial association on credit files in some jurisdictions, meaning the other person's credit behaviour affects your applications.
This does not end when the relationship does — it ends when the joint accounts are closed and you apply to the credit reference agencies for a notice of disassociation.
Which is a specific action that must be taken and that almost nobody knows about.
Until it is done, a former partner's defaults appear in searches on your applications.
The house
Where the largest amounts sit.
A joint mortgage remains joint until it is repaid or refinanced into one name, and refinancing requires the remaining party to qualify alone.
Missed payments affect both parties' credit files regardless of who was supposed to pay.
Options include selling, one party buying the other out, transferring the mortgage where the lender agrees, and continuing jointly for a period under an agreement.
Registering a home rights notice, where the mechanism exists, protects a non-owning spouse's position.
And any agreement about the property should be documented properly, since informal arrangements produce serious disputes.
Married and unmarried
Where the legal positions differ enormously.
Divorce in most jurisdictions involves a financial settlement covering property, pensions, income and debts, with courts able to make orders.
Unmarried couples in many jurisdictions have very limited automatic rights over property, pensions or maintenance, regardless of how long they lived together — the belief in a common-law marriage conferring rights is a myth in most of these places.
Which means unmarried separating couples generally rely on property law and on whatever was documented at the outset.
Legal advice at this point is worth its cost.
Pensions
The most commonly overlooked asset.
Pensions are frequently the second largest asset after property and are routinely ignored in divorce settlements.
Pension sharing, offsetting and attachment arrangements exist in many jurisdictions.
Women in particular lose substantially by not addressing pensions, given career interruptions for caring.
And obtaining valuations is a necessary step that takes time.
Coerced and economic abuse debt
Which needs naming.
Economic abuse is a recognised form of domestic abuse, legally defined in a growing number of jurisdictions.
Patterns include debt taken out in a victim's name without consent or under coercion, controlling access to money, and preventing someone from working.
It frequently continues after separation through joint debts and shared commitments.
Specialist organisations exist that deal with the financial dimension specifically, and some creditors have policies for economic abuse cases including writing off coerced debt.
Which means this should be disclosed to a specialist adviser rather than absorbed.
Practical protection
For anyone, at any stage.
Maintain an account and some money in your sole name.
Maintain your own credit history.
Know what debts exist and in whose name.
Keep copies of financial documents somewhere accessible.
Understand the position on any property you live in.
And check your own credit file periodically, which reveals accounts opened in your name.
Where to get help
Practically.
Free regulated debt advice for the debt position, which will negotiate with creditors and explain options.
A solicitor for the legal position, with fixed-fee initial consultations widely available.
Mediation, which is considerably cheaper and less damaging than contested proceedings and which is required before court in some jurisdictions.
Specialist domestic abuse services where relevant, including those dealing with economic abuse.
And a benefits check, since entitlements change substantially on separation and are frequently unclaimed.
General information only, not financial or legal advice. Rights vary enormously by country and marital status — consult a qualified solicitor and a free debt advice service.
