Whatever your age and financial circumstances, divorce can be stressful. But this pain can be drawn out if you don’t deal with your financial affairs properly before, during and after the split.
This is particularly the case if your partner has a history of debt, struggles with their finances, or has caused you money problems.
Even if that’s the case and you want to help them find their feet, it still pays off to make sure that you protect yourself. We get expert advice on what you can do.
Your partner may have been responsible for the debt in your joint bank account but experts warn not to default on any joint debt repayments
1. Break financial ties
During your marriage you’ve probably become reliant on each other’s income – according to debt management company, Lowell, half of all Brits in a relationship have a joint bank account.
If you’re finding it hard to financially unravel yourself from your partner, you’re not alone – Lowell adds that four in ten (39 per cent) of Brits found it difficult separating finances after splitting from their partner.
If you hold a joint account, you are equally liable for any debt linked to it – even if it wasn’t you who spent the money. Pay it off as soon as possible.
James Jones, head of consumer affairs at Experian UK and Ireland, says: ‘You are only legally responsible for another person’s debt if it is in your and their name or you agreed to be a ‘guarantor’ – someone who would pay a person’s debts if they couldn’t.’
It’s important to close any joint bank or utility accounts or at the very least remove the partner’s name if you wish to continue to use this account.
John Pears, managing director of Lowell, says: ‘Ensure that you tell your bank about your separation as soon as possible so that they can freeze the account. If things are acrimonious, move your wage and regular incomes into a different account. This will help to keep things separate from your partner when you receive any future payments.’
Additionally, a notice of disassociation can be used to show creditors that you are no longer financially linked to your spouse. Joanna Abrahams, family lawyer at Valemus Law, says: ‘Without this you may still be ‘linked’ to your ex and their credit history. This means that when you do apply for credit their circumstances still may be taken into consideration.’
It’s not easy deciding who gets what – 39% of Brits found it difficult separating finances after a divorce according to debt management company Lowell
2. Don’t default on your debt
While you may be keen to stop paying off your ex’s debts, it’s not wise to default on any payments. If you have a joint mortgage on your home, for example, you are both still liable.
The Mortgage Advice Bureau warns that a default on your joint mortgage repayment could seriously affect your chances of getting another mortgage once you separate.
Tom De Burgh Williams, chartered financial planner at Charles Stanley, advises: ‘You have several options to consider in splitting the family home. You can sell the property and share the sale proceeds.
‘You can arrange for one party to buy out the other party; or you can keep the home under joint ownership with one partner continuing to live in it. If you can’t afford to take over the mortgage it may be possible to get a ‘guarantor mortgage’.’
3. Change your passwords
Don’t allow your former partner access to your bank accounts. Doing so could result in them spending your money, plunging you into debt and negatively affecting your credit score.
Sarah Holt, head of partnerships at Monese, advises changing pins on all accounts. She says: ‘It may be a pain to do in the short term but changing your passwords and pins across all accounts your partner may have had access to or known about is hugely advisable and can remove the need for any awkward conversations in the long term.’
4. Regularly check your credit score
Holt says: ‘Despite the closing of accounts, these can take several weeks or a couple of months to update fully, so keep checking back to ensure that any accounts that may have once tied you to your ex-partner have been fully dissolved. This step will also help check from the get-go for any finances your partner may have tied you to that you may be unaware of.’
5. Consider a Zoom divorce
Back in January this year, This is Money reported that the average cost of a divorce is £15,000 but that digital divorces cost a fraction of that – between £2,000 – £3,000.
The court is not interested in why a marriage has broken down, but instead adopts a pragmatic approach to dividing the assets to ensure they are shared fairly between the separating couple
Theo Hoppen, partner in family law at Langleys Solicitors
Before the pandemic, divorces were typically fought out in court and meetings conducted with legal representatives were face to face.
But thanks to lockdown restrictions many divorces have been conducted over Zoom and continue to be done in this way.
This is not ideal for every case, but if it’s right for you it can save you a lot of money and time.
6. Don’t hold off till the law changes
The no fault law is set to come into effect in April 2022. If you don’t want to issue a divorce petition based on the other spouses’ ‘fault’ for the breakdown of the marriage you may be tempted to wait until next year.
Financially, it may not make sense to wait as the saving is minimal. Theo Hoppen, partner in family law at Langleys Solicitors, explains: ‘The basis of the petition has no bearing on how the court divides the assets. The court is not interested in why a marriage has broken down, but instead adopts a pragmatic approach to dividing the assets to ensure they are shared fairly between the separating couple.
‘It may be marginally cheaper to commence a petition on the ‘no fault’ grounds as the solicitor will not have to draft a behaviour petition, which can take longer to prepare.’
Agreeing legal costs upfront can save you money and lets you know what to expect
7. Agree legal costs upfront
Ask your legal expert to agree to a set fee or quote on a set amount of work – for example a certain number of hours and what can be expected for that.
Abrahams says: ‘You have a right to be advised about the costs which have been incurred and what the costs are going forward – ask for clarity.
‘Request an itemised bill. It’s easier to challenge a bill if it’s broken down. Ask your solicitor if they have a junior that can run matters that they can supervise, this will help bring down costs too.’
8. Don’t let the fight drag on
Come to an agreement as soon as possible as lawyers’ fees can build up. Hoppen says: ‘This can be achieved through mediation to understand all the issues that require resolution.’
Alternatively, consider hiring a private judge to speed up the process. The initial financial outlay can be high, but it could save you money in the long term. Abrahams explains: ‘Where there are contested finances it can be a cost-effective option.
‘You can choose your arbitrator – a qualified lawyer or barrister who acts as a ‘private’ judge and have your case heard quickly, with your desired dates to accommodate you and your legal team rather than waiting for many months for it to be listed in the family court. If you factor in those months with continued correspondence, having to pay maintenance costs, then it could work out to be far cheaper to choose private arbitration.’
9. Consider the ‘roundtable’ approach
Every letter to a lawyer can incur a charge. Instead of agreeing to the divorce settlement via email correspondence opt for a roundtable negotiation instead.
Abrahams explains: ‘Spouses and their lawyers get around a table and try to thrash things out ahead of any court hearing. It’s a cost-effective way of dealing with issues and questions, which can be dealt with there and then rather than emails going back and forwards.
‘Even if it does end up going to court, it will have saved lots of to-ing and fro-ing, so shouldn’t be shied away from.
‘Check that anyone you instruct is confident enough to do this for you. It saves on the costs of instructing a barrister too.’
10. Ensure it’s all concluded
A divorce doesn’t mean that your ex-spouse no longer has any claims to your money. Natalie Dickson, partner in the family law team at law firm Brabners, says it’s vital to ensure you have a Financial Consent Order agreement in place.
She adds: ‘In one case an ex-spouse emerged from the woodwork many years after the divorce to successfully lay claim to a significant portion of their former partner’s wealth, when they found out they had come into money. Always take specialist legal advice and ensure that your financial arrangements are properly concluded following your divorce.’
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