A major part of the divorce process is the division of assets, which will also include both your mortgage and any debt you may have e.g., credit cards or any finance taken out. Even though they aren’t classed as an asset, they still need to be considered to reach a divorce financial settlement.
The UK’s “most innovative divorce and family law firm” Fair Result shed light on which party is liable for debts during the divorce process, and how these are divided.
Chris Sweetman, Director of Fair Result, commented:
”Usually, you’re only responsible for any debt which has been signed up for your own name. However, it isn’t always quite that simple during the divorce and financial settlement process.
Debts may be split between parties if they’re classed as ‘matrimonial debt’ which means they were taken out for the benefit of both parties. For example, if a family car is used by both, but only taken out in one spouse’s name, the court may consider this to be a matrimonial debt and order both parties to pay their fair share.
The court begins divorce proceedings with the assumption that all debts signed for during a marriage are classed as matrimonial debt. So, in certain cases, all debts will be split during the financial settlement regardless of who signed to begin with.”
The different types of debt to consider during the process:
- Joint Debts/Loans – A debt that was co-signed by both parties (e.g., Mortgage, car loan, joint credit card)
- Matrimonial Debts – A debt, which is in one spouse’s name, but was taken out for the benefit of both parties.
- Debts are taken out as a “joint debt” but are only beneficial to one party.
- A debt which has been signed following separation.
Sweetman concluded:
“It’s crucial to remember that joint loans consider both parties responsible for repayments. So, make sure that your lender is aware that you are currently going through the divorce process and don’t miss out on any repayments.”
Find out more about debt during the divorce and financial settlement process here
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This article was submitted to be published by Fair Result as part of their advertising agreement with Today’s Family Lawyer. The views expressed in this article are those of the submitter and not those of Today’s Family Lawyer.
