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If your relationship is over and you need to sort out your finances, but you don’t know where to start, we can help.
Splitting from your partner can often mean splitting your finances – like your mortgage, bank account, loans and anything else you’ve taken out jointly. Would you know how to go about this and what it means for you? As part of our ‘women and debt’ series, this blog will look at how to sort your finances when your relationship ends.
We’ve all been through it – that day when you realise it’s over, your relationship no longer works and you need to leave. Part of leaving may mean you have to split out your finances, which can be very complex and upsetting. So how do you go about separating your bank account, mortgage, loans and anything else you may have jointly with your partner, and what effect will it have on your life?
What the research shows
Our research on women and debt has shown that one of the reasons women fall into debt is because of a relationship breakdown. Seven percent of those we asked gave a relationship breakdown as the reason for their decline into problem debt. And, with relationship breakdowns come other issues. You may, for example, find yourself having to cut your hours to part-time, if you no longer have your partner to rely on for childcare while you work. And, of course, your household income is likely to drop considerably if there’s now only one wage to rely on.
Six percent of women also told us that their partners had left them to repay debts that they took out in joint names. These will be things that are classed as ‘jointly and severally liable’, which means that when you signed the paperwork, you agreed to be wholly responsible for the debt, should the other person not pay. If you’re not sure whether you’ll be expected to make payments on debts you took with your partner, it’d be a good idea to have a read of this blog – Borrowing together? Know what you’re agreeing to – which explains this situation in detail.
The first piece of advice we can give you is get some help. Let’s face it, there are not many relationships that end well. Often by the time it comes to splitting up, the situation is tense and talking about things like finance can become very heated. So, what do you do, for example, if you and your partner bought your house together, the mortgage is in both of your names and you need to get this resolved as soon as you can? Well, you have a few options, you can:
Try to sort things out by yourselves – if you’re on speaking terms and you think you and your partner can resolve things amicably, it’s certainly best to try this route first. If you’re married, you will need some legal involvement, as you’ll have to formally dissolve the marriage or civil partnership, but you can fill in all the required paperwork online and you can submit the paperwork to the court yourself. If you’re not married, there’s really no reason to involve anyone ‘legal’ at all. If you can manage to resolve your issues this way, you’ll save yourself a whole lot of money in the process.
However, this only applies if you are in England or Wales. If you are in Scotland, there is do-it-yourself option called ‘simplified divorce’ too, but it can only used when there are no children under the age of 16 and there’s no financial dispute to resolve.
Get a little bit of help – if you think you’ll be able to sort most of the stuff out yourself, but may need some help with the finer details, you can book a couple of sessions with a solicitor, but do all the other paperwork yourself.
Get more than a little help – if your relationship is a little more complicated and tense than you’d like, and you think you need more help resolving things, you can opt for mediation. A mediator will help you work your way through the tricky parts of your split, which usually involves finances, and reach an agreement that suits you both.
Get lots of help – if you and your ex-partner are no longer on speaking terms, you may want to use a solicitor to resolve all your issues. This means you’ll not have to speak to your partner again, which may be a great relief if previous attempts at resolving things have not gone well. But if you’re looking to keep things as cheap as possible, it’s best not to do this, as lots of face-to-face meetings, letters and telephone calls will be expensive.
Make some short term arrangements
Separating from your partner can be a time consuming business. If it’s tricky, it could take months to resolve and, if it does, you’re going to need a short term plan in place. The plan should include who is going to pay the bills, and other expenses that need to be paid on a monthly basis, to keep the household running, like gas, electricity and water. And, if you have children together, it’s also a good idea to try and put a plan in place for other expenses, like their food and clothes.
It’s also worth looking at other credit you took, that may be in your name, but benefitted the whole family. Often couples will take out credit in one person’s name, but it’ll be used to do something that the whole family can use, like giving the bathroom a makeover. If this credit was taken in your name only, you will be the one expected to make the payments. So, you may want to try and come to an agreement with your partner about splitting the payment so you both pay half. Even if you do this, it’s still only an informal agreement between you both, officially you’re still the one responsible for making the payments. And if your ex-partner breaks it, the lenders will still chase you.
As soon as you know you’re going to be splitting from your partner and your finances need sorting out, you should get on the phone and tell anyone you and your ex-partner have joint finances with. It would be a good idea, after the phone call, to put everything in writing too.
So, get out all your official paperwork and have a look at what you signed jointly and what is yours alone. Joint agreements are usually things like your mortgage and your joint bank accounts (think about your overdraft). Anything that’s been signed jointly, you’ll be wholly liable for if you ex-partner decides not to pay, so you want to make sure that there’s some agreement in place as to how those will be deal with.
And that’ll do for today. Now you’ve got your paperwork in front of you, you’re ready to start calling. Tomorrow we’ll tell you who you need to call and why.
by Shelley BowersBack to blog home