If you are in the process of getting divorced and unsure whether you are liable for debts owed by your husband from before your marriage, remember that the person who signed the credit agreement is responsible for its repayment. For example, if the debts are in your husband’s name, he is fully responsible for making any repayments. However, for any debts incurred during the marriage that you and your husband jointly benefitted from (e.g. to fund home renovations), the court may divide the responsibility for the repayment of those debts between you and your husband, even if the debt is in the name of one spouse. Additionally, you will both be responsible for repaying any debts in joint names.
Individual debt and marital debt in a divorce
In the event of divorce or dissolution, it is important to distinguish between individual debts and marital debts. The courts normally consider debt incurred for the benefit of both spouses and/or any children as marital debt, regardless of whether the debt was taken out in one spouse’s name. For example, a bank loan taken out by either one or both spouses to fund family holidays or home improvements will almost certainly be treated as a matrimonial debt by the family courts when reaching a divorce financial settlement. Likewise, when it comes to mortgage debt in joint names, you and your ex-partner will be ‘jointly and severally liable’; in other words, you are equally responsible for payment of the full amount of the mortgage debt. This means that if one person does not contribute to the repayment of the mortgage following divorce or dissolution, the other person is still liable for any amount owing. As such, there is no distinction between how much each party repays – you may need to repay the full amount of the mortgage yourself if your partner cannot or does not pay.
If a spouse incurs debt for their own benefit, it will likely be considered individual debt in the event of divorce and will not be included in a divorce financial settlement. That person will then be solely responsible for the repayment of that debt. For example, if one party borrows money to fund gambling, holidays without their family or other purchases for themselves, this may be treated as an individual debt.
Unfortunately, it can sometimes be tricky to prove whether a debt has been incurred for the sole benefit or joint benefit of both spouses. Difficulties can also arise if one partner takes out a loan through a joint bank account without their husband or wife’s knowledge for their own benefit. If you are concerned that you may have to repay any individual or marital debts incurred by your ex-partner, please speak to our divorce lawyers for help. Our lawyers can recommend the best course of action based on your unique circumstances and provide legal representation to ensure that you do not have to pay debts unfairly.
Splitting debt in a divorce
In the event of divorce, the family courts do not have the legal power to transfer debt from one person’s name to another, even if it is considered to be marital debt. What they may do, however, is give a larger share of the matrimonial pot to the party with the debt to cover the repayment of the remaining amount owing. For example, if your husband took out a loan in their name to fund some home improvements for the benefit of the whole family, the court may give them a larger divorce financial settlement to cover the capital owing plus any interest.
How to protect yourself from debt after separation
There are several ways that you can protect yourself financially if you divorce, including:
- Registering a matrimonial home rights notice to ensure that it cannot be sold or re-mortgaged without your knowledge and agreement
- Contacting your mortgage provider or landlord if you are concerned about your ability to pay any amount owing, and
- Speak to your bank or building society to see if they will freeze your joint account to ensure that your ex-partner cannot build up further debts in your name.
