Notice of defaults: everything you need to know
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Find out whether you or your ex-partner will need to pay off joint debts.
Splitting up with a partner is usually a sad time as you come to terms with the end of your relationship. It will also mean a reasonable amount of work as you move from having a shared life to two separate lives. This can mean closing down any joint bank accounts, dividing up your possessions and – if you own a home together – finding somewhere new to live.
But if you owed money with your ex-spouse, who needs to deal with this after your divorce? Will you just pay half each? Let’s take a look at your legal responsibility when it comes to joint debts.
With most debts you took out jointly with someone else, you’re ‘jointly and severally liable’. That might sound technical, but it just means you and the other person are both responsible for paying 100% of the debt. So if one of you can’t or won’t pay anything for some reason, the other person will have to pay the full amount.
Even though you’re now divorced, you’ll still have to pay towards any joint debts you have with your partner. That’s because you took out the credit agreement when you were still together and this doesn’t change after your divorce.
The same is true if you had a joint mortgage together – you’re both responsible for the whole mortgage. So if your ex doesn’t pay anything towards this, you’ll have to cover the full mortgage payment.
We know it might be the last thing you want to do when you’re going through a breakup, but try to take some time to sit down with your ex-partner and decide how you’re going to cover the mortgage going forwards. If one of you is going to stay in the property, they may decide to buy out the other one’s share of equity.
For example, say you were planning to live in the property and you had £10,000 equity in the property, you might come to an agreement to give your ex £5,000 and they won’t have a claim over it anymore. You might need to remortgage to do this and you can then get their name taken off the mortgage. If you wanted to come to this sort of arrangement, it’s important to involve a solicitor to make sure everything’s legal and above board. The other person’s name should also be removed from the land registry, to avoid any issue further down the line.
The only joint debt you’re not both responsible for is if you had a credit card with your ex. This is because there’s actually no such thing as a ‘joint credit card’ – it’s just a credit card in your name with another person as a second cardholder. So if you were a second cardholder on your ex’s credit card, you don’t legally have to pay anything towards this.
If your ex took out any debts just in their name during your marriage, you don’t have to cover this when you’re divorced. Even if they took the credit out for something you both benefitted from – such as a loan to do up the garden – you’re not legally bound to make any payments towards this.
But if you had any joint credit agreements or a joint bank account with your ex, you’re now ‘financially linked’. This means their credit history could affect yours so if they’re not keeping up to date with any of their own personal debts, you might find this makes it harder to get credit. This will depend on the creditor and their criteria when they credit check you but you could find that some will reject you and some will only accept you at a higher rate of interest.
When you’ve separated from an ex, it’s a good idea to get a notice of disassociation. This is something you can get from the credit reference agencies which breaks the financial link between you and your partner. This means their credit history shouldn’t affect yours anymore. It’s important to remember though, that you can’t get a notice of disassociation if you still have active joint accounts with your ex. So if you had a joint loan together, this needs to be paid off before you can apply for a notice of disassociation. You should also check out our blog on dealing with joint finances when you break up.
Struggling with your finances when you’re getting divorced can be really hard, it’s one of the most common reasons why people get into debt problems. If you were used to dealing with all of the bills together, it can be quite a challenge to adjust to paying these on your own, especially if you’re trying to manage unsecured debt repayments on top of this.
But you don’t have to go through divorce debts alone – you can get help. By speaking to a debt expert, you’ll be able to find out about the different ways to work towards getting debt free.
You can get in touch with our debt advisors using any of the options at the bottom of the page and they’ll be able to tell you about the different debt solutions available. They’ll talk through your finances with you and they’ll then tell you which solution – if any – is best for dealing with your debt problem.
by Emily BancroftBack to blog home