I am getting divorced – what do I do about money?
If you are married or in a cohabiting relationship, your finances will be interwoven in various ways with those of your partner. You almost certainly agreed to share household expenses in various ways when you first moved in together. Maybe you even have a joint bank account.
Every couple comes to their own arrangements according to their individual circumstances. Sometimes these arrangements might be official ones for the outside world – for example, only one party in a marriage might sign the dotted line in a loan agreement– but in most cases they’re informal agreements made between the couple according to what seems best and fairest in the circumstances.
But estrangement, separation and divorce can throw these day-to-day fundamentals into a state of flux and uncertainty. It can be a stressful time if you don’t know what can and should happen.
During the divorce, who pays the joint bills such as the mortgage or utilities?
The first and most important thing to note is that separation or divorce does not free either party from any financial obligations they held beforehand – the person responsible for paying the mortgage, for example, will continue to be responsible, even if they are the ones to move out of the home. This responsibility can only end if and when alternative arrangements are made with the agreement of the mortgage provider – for example, one party buying the other out, or more commonly, the property being sold and the proceeds divided so each party can set up a new household elsewhere.
The same principle applies to other household outgoings such as council tax and the electricity bill: whoever paid those bills or made those payments should continue to so unless and until other financial arrangements are agreed, either directly or as part of the divorce settlement.
If you jointly made particular payments you should both continue to do so until new arrangements are agreed. At that point things will most likely change. If one party remains in the former family home for example, a family court will probably expect them to take on full responsibility for the council tax payments and electricity bills if they can now afford to do so following a financial settlement with their ex. The primary purpose of a divorce settlement is, after all, to separate the finances of each party, ensuring that both parties leave the relationship with as much as they need to lead separate lives.
I have joint debts with my partner – how are those handled?
It’s pretty common for couples to take out joint loans – for cars, sofas, home refurbishments, the list goes on. Just like mortgages, the repayment of any joint debts must continue after divorce or separation. Your personal life is of no concern to lenders after all. But of course, you now wish to lead separate lives and an important step toward doing so will be disentangling your finances.
The first thing to do is to talk to your soon-to-be-ex-partner and try to come to an agreement about the best and quickest way to settle these debts – by selling that car or sofa perhaps. But what if you can’t agree? Maybe your ex denies that they’re responsible for a particular debt – or you do the same. Then responsibility for those joint debts will have to be formally ruled on and incorporated into the divorce settlement with the help of a family solicitor or judge.
What about loans from friends or family?
Informal loans from friends or family are a little more complex and the solution will depend on the precise nature of the relationships involved and the agreements made – but as a general rule they should be approached like commercial debts during divorce: first try and reach an agreement with your ex. If you cannot, incorporate them into the settlement.
Do children affect who pays the bills during a divorce?
The best interests of children are a primary concern for the family courts during a divorce. Divorcing parents will be expected to pay the bills necessary to ensure their children’s welfare during the divorce – mortgage payments, for example, household bills or school fees. Formal child support obligations will be included in the eventual settlement.
My ex isn’t paying their fair share – what can I do?
But what if they don’t pay their fair share? What if you are in financial difficulties because your ex is refusing to pay up? Then, with the aid of a solicitor such as Major family Law, it may be necessary to ask the family courts to intervene. Courts can, for example, order temporary maintenance payments prior to a formal divorce settlement. This is called ‘maintenance pending suit’. Ask an expert family solicitor about the options open to you.
If you are concerned about your bills or your finances relating to divorce, contact us to request a free 45 minute consultation with one or our specialist solicitors.