Dividing joint debts – How liabilities are handled in divorce

Dividing joint debts is a critical issue during the process of separation or divorce, particularly under the laws of England and Wales. When a couple decides to part ways, they not only need to split assets but also determine who is responsible for shared liabilities. To understand your legal position, it’s advisable to speak with experienced Family Law Solicitors who can help navigate these complexities.

In the legal context of England and Wales, dividing joint debts during divorce involves a detailed assessment of financial obligations, ownership of those debts, and how courts perceive fairness. While assets are often a focal point, debts such as mortgages, personal loans, credit cards, and overdrafts are equally significant. Whether or not your name is on a debt can drastically impact your liability.

Understanding what constitutes joint debt

Joint debts are liabilities in which both spouses are legally responsible. This means lenders can pursue either party for the full amount. Common examples include:

• Joint mortgages.
• Joint bank loans.
• Credit cards in both names or with authorised users.
• Overdrafts on joint accounts.

If a debt is in only one name, it doesn’t necessarily mean the other partner escapes responsibility. Courts can factor such debts into settlements depending on how and why the debt was accrued.

How courts handle joint debts during divorce

Under the Matrimonial Causes Act 1973, courts aim to achieve a fair distribution of both assets and liabilities. Key factors include:

• The financial needs, obligations, and responsibilities of each party.
• The standard of living during the marriage.
• The duration of the marriage.
• Contributions to the welfare of the family.

While dividing joint debts, the court may order one party to take on more of the debt burden if they are more financially stable. However, this doesn’t release the other party from liability to the creditor, unless the debt is refinanced.

Options for managing joint debts after separation

There are several practical routes divorcing couples can take to manage joint debts:

1. Pay off joint debts before finalising the divorce. This prevents future disputes or credit issues.
2. Divide debts through negotiation or mediation. This avoids the need for a court decision.
3. Seek a formal financial order. This makes arrangements legally binding.
4. Consider refinancing or transferring debts. This removes one party’s name from liability where possible.

Impact of credit scores and legal responsibility

Even if a divorce settlement says your ex will pay a joint debt, if your name is still on the account, missed payments can affect your credit score. Creditors are not bound by divorce orders, and both parties remain liable unless the debt is paid or transferred. It’s essential to:

• Close joint accounts where possible.
• Inform lenders of your separation.
• Check your credit report regularly.

For a thorough understanding of your options, review guidance from the Citizens Advice Bureau.

Case scenario

Consider a couple who jointly held a £20,000 personal loan. During divorce negotiations, it was agreed the husband would pay the debt. However, he later defaulted. The lender pursued the wife for full repayment since her name remained on the account. This underscores the importance of removing your name from joint liabilities if possible and not relying solely on private agreements.

Expert insights on dividing joint debts

Legal professionals specialising in family law often recommend the following:

• Negotiate division of debts alongside assets.
• Secure a financial consent order for enforceability.
• Understand that courts aim for fairness, not equality.
• Always notify creditors in writing of your separation.

Failing to do so can result in unexpected debt obligations years later.

Benefits and challenges

• Benefits:
  • Clean financial break if debts are paid or refinanced.
  • Court orders can provide protection if enforced properly.
  • Improved credit standing when joint debts are resolved.
• Challenges:
  • Creditors can still pursue either party regardless of divorce orders.
  • Disputes may escalate to court without mediation.
  • Emotional strain and financial complexity.

Expert legal support

Our Family Law Solicitors have a wealth of experience and knowledge in handling all aspects of family law and its complexities. We understand that needing a family lawyer will likely be the most important legal advice you will ever seek. That’s why our expert, friendly team can offer you confidential, informative advice and assistance, in an environment you can trust.

Contact us for more information.

FAQs

What does “dividing joint debts” mean in divorce?

Dividing joint debts refers to determining who is responsible for repaying shared liabilities like loans or credit cards after a marriage ends.

Are both parties liable for joint debts after divorce?

Yes, if a debt is joint, both parties remain liable regardless of what the divorce settlement says unless the debt is refinanced or repaid.

How do I protect my credit score during a divorce?

Close joint accounts, notify lenders of your separation, and monitor your credit report frequently.

Is a debt in one name always considered separate?

Not necessarily. Courts may still consider it in the financial settlement depending on its purpose and benefit to the marriage.

Table: Joint vs Individual Debts

This article was produced on the 1st August 2025 for information purposes only and should not be construed or relied upon as specific legal advice.