Divorce & Your Finances

Submitted By Dennis Marshall :

Staying solvent

When you divorce, the last thing you feel like doing is reading the fine print on legal documents, or making phone calls to banks and building societies or the local council, but it is exactly what you must do if you are going to keep solvent with a roof over your head.

Even if you have split up on bad terms you must sit down and face the financial consequences of what is happening. Not to do so is to put yourself – and any children – at risk.

If you have short-term, medium term and long-term strategies for dealing with your finances, you may find it a bit easier.

Short-term

Focus on immediate practicalities. Rent, mortgage and bills have to be paid, so work out who will pay them and how. If you are the ‘guilty’ party, then you may need to shoulder the financial responsibilities initially. The ‘aggrieved’ partner may want to restrict money and make it difficult to sort out these issues.

Medium-term

Get some professional help in thinking about divorce and transferring legal documents. It may help to go to mediation – though this does cost money – so you can work out what is fair and equitable. What each partner thinks is fair is often coloured by the feelings about the split. Try neither to be over generous nor mean. Take into account the children’s needs.

Long-term

Life without each other, means making sure house deeds, wills and children’s trust are sorted out. It also means understanding that your ex may remarry and the implications for you.

Debt

Most people have debts of some kind – unpaid credit card bills, store cards, rent, mortgages, hire purchase agreements, car loans. When you split, you need to work out immediately which debts are joint and which are individual. Broadly, you will not be responsible for any debts your spouse has run up in their own name. Exceptions will be joint bank or building society accounts, and any legal agreements which have both of your names as signatories – such as mortgages, loans, hire purchase agreements.

If you are renting a home and have both paid towards a deposit to a landlord, and one of you is staying in the property, you need to work out how the person leaving will get their half of the money back.

Contact creditors

The first move you should make is to contact creditors, building societies, banks and let them know what is going on – the sooner you tell them the better. If you have joint accounts/credit cards, make sure your bank or building society know and that all transactions need two signatures from now on. This will prevent one of you emptying an account, or notching up debts.

Work out Expenditure

Work out how much money is going to come in each month once one of you has left, or now that you are alone. Can you pay for all the outgoings?

If not, do you want your ex to pay half – at least for the time being?

If so, you need to negotiate with your ex that this will happen and for how long. If you are on bad terms, this may be impossible, so you need to work out the basic minimum you need to survive.

Split joint accounts

If you have a joint account and/or joint savings, it would be fair to split this immediately. Sometimes angry ex’s empty the accounts because they see it as their ‘due’. If there are joint debts/loans to pay, then maybe you should use joint savings and nest eggs to clear them, so you are debt-free.

Freeze payments

If you can’t meet your current outgoings, then you may be able to freeze your mortgage and any pension scheme payments. Negotiate this upfront and as soon as possible.

Meter readings

Get readings of all utilities done (gas, electricity, telephone) on the day you, or your partner, moves out. You can also get meters read on the day of separation. Again, if one of you stays behind in the property, get the accounts transferred into their name.

Cutting back

Try and cut back expenditure as splitting up is costly. Can you cut back on clothes, meals out, car or taxi costs while you sort out your finances?

Child support

If you have children, work out how you will pay for clothing, food, school fees, etc. You may need to claim child support. You should contact the Child Support Agency and/or your local Department of Social Security (numbers in phone book).

Joint wills

Until you divorce legally, any joint wills, inheritance or trust funds will remain, and if do not have a will, everything will go to your ex in the event of your death, even if you separated years ago.

You should get legal advice immediately from a legal professional or law centre to help you protect your assets. You may wish to draw up a new will with a new solicitor/lawyer.

Disposal of assets

If you fear your ex will sell off the family silver without asking your or shirk their financial responsibilities you can ask a court to make an application to prevent them doing so. Again, you will need a solicitor/lawyer to do this with you.

Take control

In the long-term, your ex may well marry again and have children with a new person, so it is imperative that you need to be totally in change of your own life and money for yourself. Women who divorce often hanker after a pension that was duly theirs. The best policy is to accept your relationship is well and truly over and start planning for your life alone.

Painful

Don’t think any of this is going to be easy. Talking through money, is very difficult when you are splitting up and divorcing. Not only are you acknowledging that your relationship is over, but also you are having to be fair, or even generous, to someone who no longer loves you, or you them. It is best to be as practical as you can be about dividing money and assets, with an understanding that this process will inevitably bring up feelings.

She’s run up all the debts on our joint bank account. Why should I be jointly liable for this?

When you set up a joint account you are both signatories to it. This means you are both responsible for money paid in and money taken out. Each bank and building society have their own rules, but usually they will deem you both responsible for the running of your joint account. So if she runs up debts on your joint account, you are both responsible. This is why it’s a good idea either to freeze your account on the day you split, or put it on one person’s name – debts and all- when you part.

My ex won’t pay me a penny. How will I be able to pay the mortgage and bills?

First, talk you’re your mortgage lender and utility service providers and tell them what’s happening. Try and get your mortgage frozen for a couple of months, try to pay bills by either arranging an overdraft or loan (you could also pay bills in instalments, but you need to negotiate this now). Go and see a solicitor immediately, to help you put pressure on your ex to pay her way. If you have joint savings or other assets, or a joint overdraft, you may want to use these for joint household expenditure at least at the beginning of splitting up. But beware getting into debt, especially if it has not been negotiated ahead of time.

How can I sort out my finances when my head is in such a turmoil?

You have to. Not to do so is to put yourself at risk. You don’t have to sort out everything, however, but you do need to look at how you will survive the next weeks and months, plus look at the bigger picture long term (what to do with the house, or rent, savings or household goods). If you have a good, trusted friend or family member, ask them to sit down with you and go through your finances. If not, go to a Citizens Advice Bureau, and they can help you steer your way through the financial maze. Get help if you need it – there’s no shame in doing so and it may help you think more clearly long term. See a counsellor, if you can bear to, to sort your emotions out. Relate are very good.

She ended the relationship. The house is in her name, so do I have to move out?

Yes. You do not have any rights if the mortgage is in her name only. You need to negotiate what you can with her – and fast.

I haven’t got a job. She’s been paying for everything. How can I afford to live anywhere else?

Talk to Citizens Advice. You will be technically homeless and may be eligible for benefits and housing help. You could also try to negotiate that she would help you pay for a bedsit for a while, but she doesn’t have to. Get advice and help as quickly as you can.

Next Steps

  • Focus on the immediate practicalities. Working out who will pay the rent, or mortgage, and the bills and how.
  • If you are the so-call guilty party, then you may need to shoulder the financial burden initially and accept you have to sell up, move out and find a way of managing your finances.
  • Close any joint accounts, once you have decide who is continuing to pay the rent/mortgage, bills and other costs.
  • In the medium-term get professional help. It may help to go to mediation so you can work out what is fair and equitable.
  • In the long-term make sure house deeds, wills, children’s trust are sorted out.

Need to know

  • even if you hurt them in their pocket, it won’t take the pain away that your relationship is over
  • try and accept there will be some losses and gains all round
  • you are liable for debts in any legal agreements where both your names are signatories
  • you may be able to freeze your mortgage and pension scheme payments
  • you may be able to claim child support

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