- Half of all Britons currently have a joint bank account
- 39% of Brits find it difficult to separate finances after separating from a partner
Whatever your age and financial circumstances, divorce can be stressful. But this pain can be overcome if you do not handle your financial matters properly before, during and after the split.
This is especially the case if your partner has a history of debt, struggles with their finances, or you have money problems.
Even if that is the case and you want to help them find their feet, it still pays to make sure you protect yourself. We get expert advice on what you can do.
Your partner may have been responsible for the debt in your joint bank account, but experts warn against defaulting on any joint loan repayments
1. Break up financial ties
During your marriage you’ve probably become dependent on each other’s incomes – half of all Brits in a relationship have a joint bank account, according to Lowell, a debt management company.
If you’re finding it difficult to isolate yourself financially from your partner, you’re not alone – Lowell says that four out of ten (39 percent) Britons find it difficult to separate finances after separating from their partner .
If you hold a joint account, you are equally liable for any debt associated with it – even if it is not you who spent the money. Pay it as soon as possible.
James Jones, head of consumer affairs at Experian UK and Ireland, says: ‘You are legally responsible for another person’s debt if it is in your and their name or you agree to be the ‘guarantor’ – someone who would pay off a person’s debt if they could not.’
It is important to close any joint bank or utility accounts or at least delete the participant’s name if you wish to continue using this account.
John Pearce, managing director of Lowell says: ‘Make sure you tell your bank about your separation as soon as possible so they can freeze the account. If things go awry, move your salary and regular income to a separate account. This will help keep things separate from your partner when you receive any payments in future.
Additionally, a notice of separation can be used to show creditors that you are no longer financially connected to your spouse. Joanna Abrahams, family lawyer at Wallamus Law, says: ‘Without this you can still be ‘connected’ to your ex and their credit history. This means their circumstances can be taken into account even when you apply for the credit.
According to debt management company Lowell, it’s not easy to decide who gets what – 39% of Brits find it difficult to separate finances after a divorce
2. Don’t Default on Your Loans
While you may be willing to put off paying off your ex’s debts, it’s not wise to default on any payments. For example, if you have a joint mortgage on your home, both of you are still liable.
The Mortgage Advice Bureau warns that a default on your joint mortgage repayments can seriously affect your chances of getting another mortgage after you separate.
Tom de Berg Williams, chartered financial planner at Charles Stanley, advises: ‘You have several options to consider when dividing a family home. You can sell the property and share the sale proceeds.
‘You can arrange for one party to buy another party; Or you can keep the house in joint ownership with one partner continuing to live in it. It may be possible to get a ‘guarantored mortgage’ if you cannot afford to take out the mortgage.
3. Change Your Password
Do not allow your former partner access to your bank accounts. Doing so can cost them money, put you in debt and negatively affect your credit score.
Sarah Holt, Head of Partnerships at Moniz, recommends changing the PIN on all accounts. She says: ‘This can be a pain to do in the short term, but changing your password and PIN to all accounts that your partner has access to or knows about is extremely reasonable and avoids any awkwardness in the long term. May remove the need for conversation. .’
4. Check Your Credit Score Regularly
Says Holt: ‘Even after the accounts are closed, it can take several weeks or even a few months for these to be fully updated, so keep checking back to make sure that any accounts that you once shared with your ex-partners can bind to, has been completely dissolved. This step will also help your partner check you from the get-go for any finances that you may be unaware of.
5. Consider a Zoom Divorce
In January of this year, This Is Money reported that the average cost of a divorce is £15,000, but a fraction of the cost of that digital divorce – between £2,000 – £3,000.
Theo Hoppen, Partner in Family Law at Langley Solicitors
Before the pandemic, divorces were usually fought in court and meetings with legal representatives were one-on-one.
But due to the restrictions of the lockdown, there have been many divorces regarding Zoom and it is still happening in the same way.
It’s not ideal for every case, but it can save you a lot of money and time if it’s right for you.
6. Don’t Stop Until the Law Changes
The no-fault law is set to go into effect in April 2022. If you don’t want to issue a divorce petition on the grounds of the other spouse’s ‘fault’ for the breakdown of the marriage, you may be tempted to wait until next year.
Financially, there may not be any point in waiting as the savings are minimal. Theo Hoppen, Partner in Family Law at Langley Solicitors, explains: ‘The basis of the petition has nothing to do with how the court divides property. The court is not interested in why the marriage has broken down, but instead takes a pragmatic approach to dividing the property…