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What happens to?
The most commonly asked questions from couples separating or divorcing
Thursday, October 21, 2021
As far as any creditors are concerned the debt belongs to the person whose name it is in. It is therefore imperative that you continue to discharge any debts in your sole name or you run the risk of a county court judgment and a poor credit rating.
If you have debts in joint names, for instance a mortgage, loans or credit cards, you are both jointly and severally liable for this debt. Severally means that if your spouse cannot pay, you could be liable for the entire debt.
How does the court treat debts incurred during the marriage?
The court will divide the debts in a way that is fair to you, your spouse and any children.
Generally the court will assume (unless persuaded otherwise) that any debts accrued during the marriage are joint debts, regardless of whose name the debt is in.
To establish whether you and your spouse are jointly responsible for the debt or whether one of you is solely responsible for the debt, the starting point is to establish why the debt was incurred.
When will we be jointly responsible for debts?
Regardless of whose name the debt is in, if it was incurred for the joint benefit of you and your spouse and or any children, such as a family holiday or home improvements it is likely both you and your spouse will be responsible for the debt. It will need to be taken into account as part of the financial settlement.
If a debt is in your sole name but the court takes the view that is a joint debt, it does not have the power to reassign debts. But it can make an order that you receive a greater share of the marital assets to account for the fact you have this debt in your name. Or it can make an order that your spouse makes payments to you to discharge the debt.
When will I be solely responsible for debts?
If you or your spouse has incurred debt for your sole benefit, such as expensive hobbies, or holidaying with friends, the court may regard this as a debt only one person is responsible for. Therefore it will be disregarded for the purposes of the financial settlement. Although if you have tolerated your spouse’s frivolous spending during the marriage, the court is likely to make you liable for some their debts.
What happens if my spouse had secret debts?
If your spouse hid debts from you, for instance they had a secret gambling debt or were a secret shopaholic and you can prove to the court you had no knowledge of the debt and the debt was for your spouse’s sole benefit, you may not be liable for this debt. Therefore it will be disregarded for the purposes of the financial settlement.
How does the court treat debts incurred before we got married?
If your or your spouse brought significant debts into the marriage, it is likely you or your spouse will be solely responsible for that debt.
How does the court treat debts incurred post separation?
There is no hard and fast rule. This will depend upon the circumstances. If the debt has been unreasonably incurred, for instance frivolous spending, it is much more likely that the court will hold the person who incurred the debt solely responsible. If the debt was incurred reasonably, for instance payment of rent on a new property, the debt is likely to be shared between you and your spouse.
Contact us
To speak to one of our specialist solicitors, please do not hesitate to contact us today by calling 0191 232 8451 or if you prefer, you can email familydepartment@samuelphillips.co.uk in the strictest of confidence.
Written by Sarah Ward, Partner – Divorce and Family
Sarah “Best divorce lawyer in the North” and “Wonder Woman of the Divorce World”, joined Samuel Phillips Law in 2019.
