Bankruptcy and Divorce: A Guide to Understanding what Debt and Divorce can mean for you.
Being in debt can place an enormous strain on relationships with friends, family or your wife or husband. This can lead to problems with social relationships and even be a catalyst for divorce.
When divorce occurs it’s a very difficult time. Bankruptcy and divorce is a problem which many couples wish to rectify quickly and understand how the debts will be resolved.
Divorce can occur and the financial change can be costly. This can mean bankruptcy takes place after the divorce. Alternatively, bankruptcy can happen before or during the divorce proceedings.
We discuss all of the different scenarios to give you a little more information. If you want specific information about Bankruptcy then please visit our bankruptcy page.
Divorcing and Assets?
When divorcing there is a dividing of assets and each person will be given their fair share. It’s important to realise that our charity is not an expert in divorce, but instead we can give you guidance and support if you are divorcing and there is also debt.
Usually the marital home will be where the main asset will exist. The house may have equity which could be used to pay unsecured debt. If one person is planning to remain in the marital home but there is equity, then this can often become a difficult matter.
For instance, if a husband and wife divorced and the wife was remaining in the marital home with the children and the husband was leaving, then any equity in the house would need to be considered. Should the husband decide to enter bankruptcy and the property has equity about £5,000 which would belong to the husband then the Official Receiver in bankruptcy would want to release this, either via a third party buyout or via selling the property. This means the wife wouldn’t necessarily have to sell the house but she would need to purchase the husband’s share of the equity.
It’s always best to get specific, tailored debt advice for your situation from a qualified debt advice. Why not call us today on 0800 085 0226 for more information about divorce and bankruptcy?
Who is liable?
In short, the person liable for the debt is the person who took the money out in their name. If one person borrowed credit but both parties used the credit then the person who borrowed the money would be liable to repay it.
What about joint debts?
Often couples will have joint debts which they have to manage during and after divorce. Each party is liable for the full amount and often couples will agree to split the payment so as the full £20,000 is repaid without default.
If there is a joint debt and one person can’t repay the debt or they decide to enter bankruptcy, then the other person will be liable to repay the full amount. So, if a husband and wife jointly borrow £20,000 from the bank, then each individual will be liable for £20,000. If the wife enters bankruptcy then the husband will be liable for the £20,000. The bank would pursue each person for the full amount.
Is my husband / wife liable for my debt?
A popular question when people are divorcing is whether or not the other party would be responsible for their partner’s debt. A credit card, personal loan, store card etc is typically in one person’s name. This means that the person who borrowed the money is liable for the debt.
Debt Advice about my Divorce
If you think bankruptcy may be your only option and you are considering divorce or you have a debt problem which arose because of your divorce, then our debt advice charity can help.
You can get immediate and confidential debt help today from Debt Support Trust by telephoning 0800 085 0226. Our friendly debt advisor will be glad to provide you with tailored advice on your money problems.