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Can I get divorced when I’m in debt?

If you’re thinking about divorce or separation, there will likely be a whole range of questions flying around in your head. For many people, money worries are often at the forefront of their minds.

We hear a lot about celebrities and A-list couples going through divorce and fighting over their wealth, large assets, and multiple houses.

But what happens if you owe money and are in debt? For example, what if you haven’t paid off your credit card and you’re accruing interest? Or maybe a family member lent you a large sum that you haven’t managed to pay back yet?

Being in debt is a bit of a social taboo. We don’t like to discuss money at the best of times, but debt is usually completely off the table! This can mean we don’t understand it, don’t know how to manage it, and we let the fear of debt become overwhelming.

This is exacerbated if you are also worrying about getting divorced. However, it does not have to be completely overwhelming. For most people, debt is simply a part of life.

You can get divorced when you are in debt. Debt becomes part of the financial settlement that you and your partner will have to agree upon in order to cut your financial ties.

Making sure you legally sever your financial connection to one another is very important and is not the same as legally ending your marriage. If you do not get a financial settlement and it is not made legally binding through a consent order, you leave yourself open to risks like your ex-spouse making claims on your money in the future.

Debt in divorce

When a couple separates or gets divorced and they have shared or individual debt, this needs to be accounted for in the financial settlement. In the negotiations, it’s important to understand who is responsible for the debt, and whether it is matrimonial (considered jointly accrued) or individual debt

Generally, matrimonial debt is debt incurred when money is used for something to benefit the couple or the family. This could be purchasing a car, a house, home improvements, family holidays etc.

It doesn’t matter who’s name this debt was in, or whether it was joint. If the couple together benefitted from the end product, it is usually considered that they are both responsible for the debt.

Individual debt is when one party has built up debts by spending money for their sole enjoyment and purpose, like individual holidays, gambling, or expensive hobbies.

It might also be the case that one person brings debt into the marriage. In this case, they are likely to remain responsible for the debt as it is non-matrimonial. Similarly, if one of you builds up debts after separation, these may not form part of the financial settlement, although it does depend on what the money was used for.

For example, you and your partner separate, and your partner gets heavily involved in gambling and goes on expensive holidays, they will usually be solely responsible for this debt.

However, if debt builds because of rent or mortgage on a new home, this may well become part of the financial settlement.

So, what happens to the debt?

Debts get taken into account in financial proceedings, as part of financial disclosure, and taken off the overall matrimonial pot (your joint assets, money, property, pensions etc.).

If the debts are already in joint names, you are both liable for repaying these.

It is important also to note than if your ex-spouse cannot pay, you are liable to pay the entire debt.

The court has limited power in terms of debts and cannot force one party to pay a debt, or transfer debt from one person to the other. However, it can order that payments (e.g. maintenance payments) are made in order to help one party pay off the debt.

It can seem complicated, but most debts you have incurred through your marriage will be joint debts. This means that even if they are in one individual name, you and your partner are jointly responsible.

Each case is different and therefore, it is imperative that you seek legal advice surrounding all assets, and liabilities when separating.

If you are worried about your money, you can seek advice from a financial planner. Most financial planners will offer a free initial consultation.

Seeking advice from an expert family lawyer is also recommended as they will be able to guide you through the process of financial disclosure and explore your options with regards to settlements.

You can also access help from this range of debt support charities here. 

Useful Links

Will divorce affect my credit rating?

Divorce Directory

How to prepare for your financial settlement: Listen on Spotify

Creating financial wellbeing following separation: Listen on Spotify

A beginner’s guide to divorce: Listen on Spotify

The blog team at Stowe is a group of writers based across our family law offices who share their advice on the wellbeing and emotional aspects of divorce or separation from personal experience. As well as pieces from our family law solicitors, guest contributors also regularly contribute to share their knowledge.

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