subject: Protect Yourself From Debt During A Divorce [print this page] When people split up, they are usually aware that the assets from the marriage have to be split, but often they do not realise that any debts need to be split as well. How debts are split up will seriously affect both partners future. Therefore, it is vital that you get good legal and financial advice from the start.
The first step in managing the issue is to write a list of all your outstanding bills and your assets. Also, make a comprehensive list of all of your partner's debts and assets. Put together a folder containing all documentation that you have that relates to those debts and assets. This list and those documents will help a solicitor to give you sound advice, quickly.
Take action to stop either yourself or your partner from increasing these debts. Do this amicably if you can. Discuss with your spouse the need to protect each other and the things that need to be done to achieve this.
Joint signatory bank accounts, credit cards etc. should be frozen or cancelled as soon as possible, this way more debt cannot be built up. Do not leave joint accounts or cards as they are. A friendly divorce can turn acrimonious at any time.
Freezing a joint account may not be practical, because if you suspend the account neither of you can access the funds in that account. In addition, any household bills that are currently being automatically paid out of that account will not be honoured. A more practical alternative is to ask the bank to change the account, so that withdrawals above a certain amount can only be actioned with joint signatures.
Immediately opening two separate accounts is the best option. Doing so allows the joint account to be closed. New standing orders can be set up to pay important bills such as the mortgage and service bills from the new accounts. Remember that not paying those bills is counter-productive and can lead to the loss of the house or services.
With credit cards and store cards, the main account holder is usually liable for the debts. This means that if your spouse runs up further debts using your cards you will be held liable for that debt. If you owe nothing on the card, cancel it straight away. If you owe money and can afford to pay off the debt and cancel it, do so. Failing that, have the credit limit reduced to the minimum amount possible. Tell your credit firm of your situation. Some companies will give you a new card straight away; this will then enable you to cancel the existing card without too much inconvenience.
