Debt and divorce

Ending a marriage is rarely easy. Whether you’re the one who’s chosen to end the relationship or your partner made the decision, saying goodbye to someone you thought you’d be with forever can take a huge emotional toll on both parties. 

And having joint debt may only make the prospect of splitting up seem more complicated and more stressful. But it’s not uncommon for there to be debt within a marriage. According to the Money Charity, the average total debt per UK household in February 2024 stood at £65,569 (including mortgages).

So, what happens to debt if you get divorced? We spoke to Joanna Newton, Partner at Stowe Family Law, to get answers to the most frequently asked question. 

Should I delay my divorce until my finances are in a better place?

You may be tempted to delay getting divorced until you’ve paid off some of your debt and your finances are in a better place but you need to consider how this will affect you and your partner’s mental health, your kids (if you have any) and your general quality of life. There’s no need to delay moving on with your life. It’s perfectly possible to deal with joint debts during divorce. But there are some key things to bear in mind:

• It’s important to provide details of all of your debts as part of your financial disclosure. Failing to mention them could leave you out of pocket down the line.
• If your debts become unmanageable, get free debt advice from a professional to find out what your options are. You may be surprised at the range of help available

Are some debts more important than others when it comes to divorce?

In the court’s eyes, when it comes to divorce, there are two types of debt: hard and soft.

Hard debts are things like your mortgage, credit cards, bills etc. These generally involve a written agreement with a company or organisation.

Soft debts tend to be more informal. They are usually things like loans from a family member or friend. You’re less likely to have a written agreement for this type of debt.

This distinction is important as soft debts are less likely to be taken into consideration in a financial settlement.

What happens to debt in a divorce?

As well as being split into hard and soft, debts are also divided into matrimonial and non-matrimonial when you get divorced.

Matrimonial debts are ones that benefitted both parties or the family as a whole e.g. a car loan, a mortgage or a credit card taken out to pay for home improvements. Both of you will be liable for matrimonial debts and they’ll be dealt with as part of the financial settlement.

Non-matrimonial debts are ones that only benefitted one party e.g. a student loan, money borrowed for a holiday you took without your spouse or family, a credit card in your name only that you used for your own personal expenses.

If you can prove a debt taken out in your name only is actually a matrimonial debt, then it can be considered in the settlement. So, for example, if you took out a loan to pay for a new kitchen for the family home, this may well be counted as a matrimonial debt.

Dealing with debts accrued before, during and after a marriage

So, what happens if one of you brought debts into the marriage? For example, sole credit card debt or a student loan. Generally, in cases like this, that one person would bear sole responsibility for those debts.

In contrast, debts built up by a spouse during the marriage are more likely to be regarded as joint. This means they’ll probably be considered within any financial settlement and deducted from the matrimonial assets.

In some cases, debt may be incurred after the marriage has ended. If such debt is the result of meeting matrimonial outgoings, like the mortgage on the family home, they will likely become part of the financial settlement.

But, if one party has been spending excessively, the other party can look to obtain an order forcing the person who spent the money to cover the debt.

Debt may seem like an obstacle to getting a divorce but it’s the norm for there to be outstanding financial commitments within a marriage and they’re generally dealt with as part of the settlement and deducted from your overall assets.

But, if you can’t afford to repay what you owe, it’s a good idea to get professional debt advice to find out what your options are so you can make a fresh start after your divorce.