Going through the breakdown of your marriage is stressful enough without worrying about how you’re going to deal with the financial aftermath. However, it’s one of those things that simply has to be done, and ultimately once you’ve done it, you’ll be in a much better position to move on with your life, even if you will end up repaying some debts over a period of years.
Whether you go through this process with your divorce solicitor or are able to deal with the issue of your finances amicably, doing this at the earliest opportunity will enable you to get your financial situation in order and to deal with any debts right away. The last thing you want to happen is for your divorce to hang over for you for years because you didn’t get this organised.
You Must Do This Even if the Breakup is Amicable
There will be couples who break up, get divorced, and continue paying the mortgage and repaying their other debts together. Even if you have had an amicable breakup and you continue to trust each other, ultimately you’re not jointly dealing with these things anymore, and you cannot control future circumstances, so even if you’re a couple who remains great friends your finances need to go their own way.
Speak to Your Creditors
Don’t go too far with your financial planning post-breakup without speaking to your joint creditors. This is because you might come up with a great plan with your partner, only to find that your creditors don’t accept what you’re saying. After all, your creditors have no obligation to remove you or your partner from a credit agreement, unless ordered to do so by a court during property settlement proceedings. If you ‘just stop paying’ the only person who will suffer is you via late payments and potentially defaults on your credit file.
While this may seem the most simple and straightforward solution, remember your joint creditors lent to you based on your dual income and your circumstances. Under responsible lending regulations they would potentially be open to legal action if they simply allowed one of you to take on the entire level of borrowing without first doing a fresh credit and affordability check.
Make a New Budget
Just like your existing creditors would need to re-assess your financial situation before making any decisions about your accounts, you need to make a new budget for yourself to understand how you’re going to be able to deal with your debts.
Now that you’ll be solely responsible for all the bills, and potentially having to cover child support costs depending on your circumstances and what you and your partner agree, you need to have a clear financial picture. Take your time when putting together a new, personal budget. Doing this can be quite a shock to the system, but it needs to be done.
Often, your new budget will look better than you thought it would, too, once you consider both your reduced outgoings as well as your potentially reduced incomings.
Do The Things You Have No Choice but to Do
If it quickly becomes clear that paying the once joint mortgage while also having to “buy out” your ex-partner’s share of your property is unsustainable, it makes sense to get the house on the market at the earliest opportunity so you can remove your repayment obligations and move forward. Depending on the status of your mortgage and property you could both end up with a useful amount of money to use as a deposit on a new property that you can then apply for a mortgage for as an individual.
Whether it’s your home or another obligation, if it becomes clear you have no choice about something, get it out of the way and move on.
Use Debt Consolidation to Bring Your Other Debts into Hand
Although creditors are unlikely to allow you or your partner to simply remove yourself from credit accounts and leave the other one to make the payments, you should easily be able to organize clearing the accounts so you can close them down.
In most cases, the easiest way to do this is with a debt consolidation loan. This way, both parties can be happy that the joint financial accounts have been dealt with and aren’t going to impact on their credit history in the future. With separate, individual debt consolidation loans, both parties can then repay their previous debts and not worry about whether their partner does the same. With a joint credit account, one partner could end up having to repay the full amount if the other suddenly stops paying, but using debt consolidation means you’re only accountable for your own portion of the debt.
This can massively reduce your stress levels when it comes to dealing with post-breakup finances, and is usually the best option for ensuring you can quickly move on while continuing to manage your debt obligations and ensure your credit file is set up nicely for any borrowing you need to do as an individual or with a future partner.
Explore Your Options Now
With NOW FINANCE you can get your interest rate before you apply for a debt consolidation loan, so you’ll know exactly what your repayments will be and be able to think about your individual budget as you look to move forward with your life.
We know that splitting from your partner is never easy, but with your financial obligations having the power to have a long-lasting impact on your future, it pays to deal with them as soon as you can.
Disclaimer: This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.