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Wellbeing

What to do with joint finances when you break up

Posted 16 April 2015

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Understand your next steps

When in a relationship it’s common to merge your finances. But in the event of a break up, you should aim to financially separate yourself from your partner as soon as possible.

It’s only natural when in a relationship to start building your life together, whether that’s moving in, or getting married. But in the event of a breakup, regaining control of your finances and separating yourself financially from your partner should be a priority.

Recent research* conducted on our behalf found that of those who have split from their partner in the last year, two thirds are still financially linked to them. Of those, 1 in 3 still have a joint tenancy agreement with their ex, while 1 in 4 continue to share a mortgage. If you’re in this situation, don’t worry, we’ve got lots of information below on what to do.

Current and savings account

When you split with your partner, contact your bank to let them know straight away so they can freeze your account to prevent you or your ex accessing the money until you’ve come to an agreement on how it will be divided up.

Cancel or rearrange any Direct Debits or standing orders that you have going out of your joint account, so that these will be taken care of while it’s inactive.

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Credit card

If you have a credit card that you took out in your name and your partner has an additional card linked to the account, you’re responsible for any money borrowed on either card. So, contact the credit card company as soon as possible after the split to cancel their card so they can’t run up a balance that you’ll be responsible for.

Loan

If you took out a joint loan, this isn’t something you’ll be able to sort out on day one as it will take a bit of time. You’re both responsible for making the repayments … even though you’ve split. If your ex stops their repayments, unfortunately you are liable for all of the remaining amount (not just a half share of it).

If you find yourself with an ex who’s unable or unwilling to pay, let your bank or lender know about the situation as soon as possible as they may be able to give you reduced payments if you can’t afford them until you get the situation sorted.

If you’re on good terms and you agree you’re going to continue to pay the debt off together, the situation should be a little easier. Perhaps one of you could make the monthly repayment, whilst the other transfers half of the amount into their bank account … it’s really what works best for you.

Mortgage

When it comes to a joint mortgage, again, this isn’t something that’s going to be sorted in a day. The first step is to inform your lender of the split, as they may be able to offer you a payment holiday whilst you decide what to do next.

One of you may decide to sell their share of the house to the other, or if neither of you will be able to make the mortgage payments on their own, you could sell the whole property to pay off the remaining mortgage balance and then split any profit. Seek help from a professional if you’re unsure of what your next steps are, as they’ll be able to advise you on the best course of action to take.

Talk to someone

Going through a break up is hard, and probably one of the last things you’ll want to do is sort out your finances, but it’s really important that you do. If you end up missing payments, not only could your credit rating be damaged, but you could also be at risk of having your home repossessed.

You don’t have to do it alone … help is available. Read our debt and divorce action plan for more information on how to deal with joint finances after a break up, or speak to one of our debt experts who can offer help and support on what to do next.

*OnePoll questioned a nationally representative sample of 2,000 adults aged 18 and over between 16th March and 26th March 2015, of whom 500 were Scottish residents.

by Sarah Symons

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.