What Happens to Debt on Divorce: We Look at the Options

Divorce | Family Law | Robertsons | Cardiff

Divorce and debt are two dreaded words that can end a marriage. If a couple is having issues and finding it difficult to live together, then they have an option to either separate or start the divorce process. Once the couple decides to separate their ways, the next step is to discuss the debt, if any, and sort out the finances.

It is almost never a good idea to put off a separation or divorce because you are in debt.  If you believe that, because of the debt, you are not able to think clearly, then it is best to consider all your options.

Debt and divorce proceedings

Many divorce solicitors believe that debt is one of the chief reasons behind divorces. Some examples are –

  • A spouse has hidden important financial transactions from his/her partner, which has resulted in the loss of trust in marriage.
  • Due to family debt, there have been various financial issues, which has resulted in intense arguments between the couple.

If the spouse has shown unreasonable behavior due to the debt issue, then it can be included in a divorce petition. However, it is best that the respondent to the divorce proceedings agrees to the divorce and states that they do not accept the debt allegations. This way, the cost of contested divorce proceedings can be avoided. The respondent to the divorce petition can later argue their case in the financial court proceedings.

Debt and financial disclosure

In the case of negotiating a financial settlement or requesting the court to make a financial court order, you must disclose all your debts. In financial court proceedings, financial disclosure requires giving information about all the assets and debts.

Debt can include both joint debt and individual borrowings. It is not only loans and overdrafts, but also comprises, for example, money borrowed from family, gambling debts, car loans, credit cards and hire purchase commitments.

Other than providing details of the debt, it is equally vital to reveal how much money is repayable each month. Without all this information, it is not possible to explore all the options for a financial settlement.

Am I liable for the debts that are in the name of my spouse?

If your spouse took the loans or debts in their name, then the creditors cannot chase you for recovery of the debt. However, this does not mean that you not liable for the debt in the eyes of the family court. The court may have to consider whether the debt is “family debt” or “non-family debt”. For instance, if the wife used a credit card to pay for an expensive holiday, the judge will most probably see the loan as a family debt as it ‘benefited’ the family, even if the husband was not happy with the purchase. This will mean that both parties may have to pay towards the loan. In the case where a loan was taken to buy gifts for a new partner or utilities for a new home; there is a chance that it is seen as a non-family debt. 

What happens to non-family debt in the court proceedings?

If it is found that a spouse has taken debt only for their use then a divorce solicitor can reason that the debt should be “added back” to the assets of the person who took it. 

Usually, the divorce court adds back non-family debt to the family asset if the spending was excessive and irresponsible.

Non-family debt is an extremely sensitive subject. Therefore, it is advised to take into account the additional legal costs entailed in evaluating the debt and the advantages of following the legal argument.

At Robertsons, we will help you to access the situation and decide on whether it is in your financial interests to follow the non-family debt argument or not. The decision will depend on the money involved and how irresponsible the spending was and the possible extra legal costs.  Please contact our matrimonial team on 029 2023 7777 or law@robsols.co.uk.


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