How are debts dealt with on divorce?

When a couple divorces, there is a common misconception that all debts will be the joint responsibility of the couple, but this is not always the case and the court’s decision will take into account each couple’s circumstances.

When debts are held in the sole name of one party

If the debt is held in your spouse’s sole name, whether it will be classed as a matrimonial debt is determined by how the money was spent.

If it was used for the benefit of the family and both you and your spouse consented to the expenditure, for example for a family holiday or renovations to the family home, then it’s likely that the court will class it as a matrimonial debt. Consequently, the debt will be your joint responsibility and taken into account when your assets are divided.

If your spouse incurs debts by undertaking activities unrelated to family life that you do not consent to, then the court may decide that your spouse must bear these debts alone. Such activities could include gambling, buying an expensive car or an extravagant shopping trip.

In this case, the court is likely to not take these debts into account when dividing your assets and your spouse would instead bear the responsibility for repayment.

When debts are held in joint names

When debts are held in both your names, there is a presumption that they are the responsibility of both of you, so if you wish to argue that this should not be the case, you would have the burden of proving to the court that the debt was taken against your wishes or for purchases unrelated to family life.

Establishing who is responsible for individual items of expenditure is a difficult and time-consuming exercise, and the court is not always willing to attempt to do this. In the case of joint debt, it is likely to remain your joint responsibility to repay.

If debt is secured against the home, by way of mortgage or secured personal loan, this will reduce the equity remaining in the property for you and your former spouse to divide.

For additional information on how debts are dealt with on divorce, or for advice on any family law matter, contact Janine Hutson by email or call 01772 258321.