Joint debts - what to do if you split up | Savvywoman

Joint debts – what to do if your relationship breaks down

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If you’re taking out a joint loan, mortgage or another form of credit with your partner, it’s vital that you understand what it means. You could be left with a large debt if your relationship breaks down.

Joint loans

If you have a joint loan from the bank or another provider you should take steps to protect yourself if you and your partner or husband break up.

  • If you have a joint bank or personal loan. Tell the lender that you have split up and that you don’t want any changes to the account (i.e. the amount of the loan increased) without you being informed.

SAVVY TIP: If you’ve taken out a loan in your name but your husband or partner was supposed to pay it, make sure the payments are being made or make arrangements to take over the payments, otherwise your credit record could suffer.

  • Make sure the lenders have up-to-date contact details for you. By law, if they want to take you to court for unpaid debts they don’t have to ensure you’ve received correspondence. It’s enough for them to have sent the information to you.

SAVVY TIP: If you don’t receive letters asking you to pay your debts, the lender could apply to the courts to get a county court judgement against you. If it’s successful, it will remain on your credit file for six years and will seriously damage your ability to borrow during that time. Try and avoid it at all costs.

Joint bank accounts

If you have joint accounts you should talk to your partner or spouse about writing to the bank to close the accounts. You will both need to sign the letter and the account must be in the black before you can close it.

Alternatively:

  • Switch from either of you signing to both signatures. This means that for any transactions to go through you’d both have to approve it. It doesn’t work for everyone. But it can be useful if you don’t trust your partner not to run up debts.

SAVVY TIP: Either of you can contact the bank to tell them that you’re splitting up and you’d like to change the way the account is operated. But you’d both have to agree that direct debits etc could continue to be paid if the account was altered to a ‘both signatory’ basis.

  • Get the overdraft facility removed. If your bank won’t agree to this, ask them to tell both of you if one person applies for an extension or increase in the overdraft.

SAVVY TIP: If you do nothing you could end up with serious debts. If your ex goes on a spending spree and refuses to pay his or her share, you could be pursued for the full debt amount.

  • Find out how you can get regular statements. If you’re the second named on a joint bank account you may find your bank won’t send you statements unless you ask for them (sometimes you have to ask for a statement for each month separately). Make sure you find out your bank’s approach.

SAVVY TIP: Be aware that even though it’s a joint account, some banks will only deal with the ‘first named’; i.e. the first name to appear on the agreement. So the second-named person could find the banks won’t act on their instructions.

Joint mortgage

If you have a joint mortgage you won’t be able to take your partner’s name off the mortgage (or get your name removed) unless the lender is happy that you can afford the mortgage in your own right.

  • The lender may not let one name come off the mortgage. If you have a joint mortgage and you want to take it over get in touch with the lender directly. They may charge you an administration fee for transferring it to your name and you’ll need to use a solicitor to sort out the legalities of it.
  • If you’ve left the mortgaged address. If your name is on the mortgage but you’re no longer living there, you may feel that there’s little incentive for you to continue paying the loan. But while your name is on the mortgage, it will affect your credit rating if payments aren’t made.

Credit cards

In the UK there’s no such thing as a joint credit card, even if the account has more than one card there’s always one person who’s signed the agreement. If you’re the principal cardholder: it’s your responsibility to pay the bills.

SAVVY TIP: If you and your partner are splitting up you should contact your credit card company and tell them what’s happened. The card company will probably ask you to destroy the second card and will either let you carry on with the existing agreement or draw up a new one in your name only.

Related articles:

Joint investments; how to work out with your partner how to invest your money

Many couples have joint accounts but are there advantages to keeping your money separate?

Separating your finances when you get divorced, why it’s worth doing sooner than later

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