Divorce and finances: a guide

If you are in a relationship and have decided to break up, you will need to consider what to do about your finances. Divorce is a big change and it's a good time for both of you to review your finances.

Dealing with joint assets and debts can be difficult - it's an added pressure in a situation that's already difficult. You may find a mediator can help you to come to an arrangement that you both feel is fair.

Otherwise, if you are having difficulty dealing with your joint finances and debts, you could apply to the court for help deciding things. This may not be the best approach as it could cause bad feelings between you, but you may feel it's the only option.

Please note that this webpage is intended as a guide only and is no substitute for independent legal advice - a professional mediator can supply you with personalised advice, so you may wish to visit a solicitor or Citizens Advice Bureau.

Financial checklist

The following is a list of many of the financial 'assets and liabilities' that you'll need to divide between you, either informally or with the help of a solicitor. Obviously, the more you can agree between yourselves, the less you will have to rely on potentially expensive legal advice.

• Mortgage
• You'll need to decide where you'll both live. You also need to keep your mortgage payments affordable.
• Consider whether you could continue to live with each other, until you both have somewhere to live.
• If one person moves out, a lodger could move in to contribute to the mortgage payments.
• One of you could keep the mortgage in their own name, provided your mortgage provider agrees.
• There may be a fee to remove one person's name.
• You would need to consider whether one of you could afford the mortgage on their own.
• The partner who leaves could still contribute to the mortgage following divorce, as part of the settlement.
• You could sell the property and divide the income between you - or put any profit towards repaying other debts.
• One of you could keep the house if the other keeps something else of equal value. Again, you'd need your lender to agree to this.
• If one person's name is not on the mortgage, but they have made contributions to the home, they could be entitled to something.
• If you are in arrears, you should find a way to repay those as soon as possible, or be at risk of losing your home. Lenders will always work with you to avoid repossession.

• Rent
• If you are mid-contract and one of you moves out, they will still have to pay their share of the rent until the contract expires, unless their name is removed, or you reach an agreement between you.
• Consider whether you could continue to live with each other, until you both have somewhere to live.
• If one of you remains in the property, they could advertise for another tenant or lodger - if the contract allows that.
• If you have rent arrears, you both need to agree a way to repay them as soon as possible, to avoid eviction. This should be a priority.

• Bills
• You'd have to choose which partner will be responsible for the bills associated with a property and transfer those bills to one name or you'll be jointly responsible for them.
• If one of you is moving out, it's possible one of you could be paying bills for the first time. That person may find it difficult to be accepted for quarterly bills (owing to their lack of credit history), in which case it's possible to pay by Direct Debit.
• You don't have to remain with the same utility provider if you can find a cheaper one elsewhere. You can shop around for the best deals on utility bills at uswitch.com.
• If one of you is moving out and your joint bills are in arrears, you need to decide a way to repay them as soon as possible, or come to an agreement between you (please see joint debts below).

• Debts
• It's important to know your rights. The law sees any debt between married couples as a joint liability. However, lenders will only ask for repayment from whoever has their name on the original agreement. If you have a debt, but your partner's name isn't on the agreement, it's up to you to get back any money that you're owed.
• If either of you is struggling to make debt repayments, a debt management plan could help you by lowering your monthly repayments and potentially freezing interest and charges, in order to keep your priority bills affordable while paying off debt.

• Assets
• The more you can agree between yourselves, the less you will have to spend on legal advice. However, for more complicated assets, we suggest you obtain independent legal advice.
• Some things can be solved with common sense - if you both have cars for example, you could each keep your own car.
• However, if you own a car together and still owe money on that car, one person could offer to 'buy out' the other.
• Any savings will be considered a joint asset and part of the 'matrimonial pot'. You could try to come to an agreement about how to divide them.
• Any savings could be used to repay joint or individual debt, allowing both of you a fresh start.

• Finances
• Your partner could still be entitled to part of your pension following divorce.
• You may wish to update your will following your divorce.
• If a spouse is named as a beneficiary on a life insurance policy, they would still be entitled to a pay out (in the event of their ex-partner's death) following divorce.

Finally

There may be other financial matters not included here that you'll need to work out. So please remember that we may be able to help you with your finances if you are facing problems with debt or sorting out how to repay debt following a divorce.

Debt solutions are subject to conditions and acceptance. Your credit rating may be affected. Fees payable if continuing services are provided. Repaying debt over a longer period of time may increase the total amount to be repaid. Calls may be recorded for training and quality purposes. Calls to 0800 numbers from BT landlines are usually free, calls from other networks may vary and you should check with your network provider for full details of your service.