Separation or divorce
Getting separated or divorced is an extremely stressful time for all involved. It can also have huge implications for your personal finances. Tackling your finances as soon as possible can help you take a positive step towards getting your life back on track.
Make mortgage matters a priority
If you and your former partner have a mortgage together, deciding what to do about your home can be difficult. If you are married or are civil partners and seeking a legal separation, decisions about the house and mortgage will form part of the agreement. However, if you are not married or civil partners, it can be more complicated, particularly if you did not agree what you would do in the event of a separation before you bought the house together. If you qualify as a co-habiting couple then you have certain rights if you were financially dependent on your former partner. If you both had a written agreement on your financial affairs, then this will be legally recognised.
Because there are legal issues to consider, you should contact a solicitor for advice on dividing your home, dealing with mortgage issues and dividing the contents of your home. As well as your solicitor, a financial advisor will also help you weigh up your options and ensure that any agreement you make is fair to both of you.
Be aware that if you want to stay in the house and take over the mortgage by yourself, you will need to apply for a mortgage in your own name. It is not possible for the other party to just take themselves off the mortgage without you first getting a mortgage in your own name. Talk to your lender about your options. If your home is in negative equity, you need to discuss your options with your former partner and your lender.
Complete a financial health check
You will need to complete a personal finance overhaul now that your circumstances have changed. First, you need to know what you have to work with, so make a complete list of your current savings and sources of income (including any benefits, allowances and tax relief etc.). Then try to make a list of what exactly you spend your money on. Use our money makeover and budget planning section to help you. This will help you look at areas that you could possibly change.
Make a proper budget
Use our handy budget planner to work out how you are going to spread out your expenses and what you can afford on your current income.
Splitting your joint finances
If you have a joint bank account, the first thing you will need to do is pay off any outstanding household bills from this account. You also need to agree whether you will close your joint account and split any money in it, or whether one of you will keep the account.
If you are going to keep the account open, contact your bank in writing asking them to change the account into one name.
It’s also a good idea to review your insurance policies as you may need to amend an existing policy or take out a new one. For example, if you have a joint life insurance policy, you will need to cancel it and take out a new policy in your own name, if you still need one.
Dealing with your debts
Consider any outstanding non-mortgage debts that you and your former partner hold jointly, including any credit cards, loans, car loans or car finance agreements. If you are married, dealing with debt will form part of any legal separation but if you and your partner were living together and have joint debts, you need to tackle them before you go your separate ways. Talk to your solicitor if you need to.
If your debts are in joint names, you are jointly responsible for them, and missing repayments will affect your credit rating. List out all the debts and decide who is to pay what. Contact the lenders and let them know what you have decided to do. If debts are not met, a lender can take you both to court.
If you are struggling financially, you may need a short-term personal loan to help you through the first few months. While there are many options and types of loans available, try to get one with a low annual percentage rate (APR).
Use our personal loan Money Tool to check out current rates from the main providers. You can also use our loan calculator to find out what your repayments would be depending on how much you want to pay back every month or how much you want to borrow.