When we are in love we have all the best intentions don’t we?  Nothing will separate us, we are to be together forever.  Then forever comes and it’s divorce time or splitting up with our partners, and we have accumulated debts separately and together/jointly.  What happens then?

Well I am going to explain what happens then/now for a good reason.  As the economic times turn,  I am seeing and hearing from more and more people, married or partners, that have split up, for whatever reason, and they have jointly held debts and one of them ceases to pay or files for bankruptcy.

The bottom line here is if you have debts that are in both your names, you are both responsible, period.  Not just half of the debt each, but the entire amount of the debt.  So if a couple split up and one person is supposed to pay a debt and refuses or cannot for whatever reason, the other person is fully responsible for the debt and the creditor/bank/mortgage company can chase that other person for payment.  Love 101 doesn’t cover all this now does it?

Here are a few examples:

A partnered couple split up and they have £20,000 of credit card debt and a car on HP.  The car is in both names and the credit cards are about £5,000 in each others names and about £10,000 jointly held.  They both need to maintain the payments to all the debts and they can decide who pays what, but for the car on HP and the £10,000 of jointly held credit card debt they are both responsible.  So if one person agrees to pay this and that, how does the other person know it is being paid, they really don’t until the creditor phones them asking for payment.  The relationship is over, but not really as there are ties that bind.  Think of the debts as children that need to continue to be provided for after the split.

What if one of the ex-spouses or partners decides to file for bankruptcy?  Then they can be relieved of the debts and the other partner/spouse is responsible.  And if there is property involved and one person signs it over to another and it had equity, the court/Official Receiver will review the transaction and can reverse it if they feel the bankrupt did the transfer to hide an asset.

Now in a divorce situation where there are court papers drawn up outlining this transfer, that can be different.  I cannot really say if the transfer would be allowed or not as these cases have been challenged in the courts and have gone either way.

An interesting case came up yesterday, a woman phoned for information on bankruptcy and we discussed her situation and bankruptcy was a strong option.  However the debts were jointly held with her ex-husband and she was in the marital home and could not afford her half of the monthly payments.  So she was going to go bankrupt, which forces him to make all the full payments, which she stated he could not do as they had discussed this.  So in essence, once he was saddled with all the debts and mortgage, he would be forced into bankruptcy as well.  He works at a bank, and as a condition of employment if he was to go bankrupt, he would lose his job.  Now that is a sad place to be in on both their parts. She can no longer service her portion of the debts and by going bankrupt almost forces him into the same situation in which he will be unemployed.

Just a little something to think about over that romantic meal and candles burning, that love may last forever, but it also may not and any joint debts have their own life span.