How to deal with joint debt after a separation

Having a joint account with a partner can be helpful for paying shared bills and rent, and some people may find it makes managing money easier. But there are drawbacks to having a joint account, especially if you and your partner separate. Sorting out joint debt after separation can be tricky, especially when it’s going along with a difficult split or divorce proceedings.

That’s why we’ve created this guide for anyone struggling with joint finances and dealing with joint debt. In this guide, we’ll discuss research commissioned by Lowell revealing some of the UK’s biggest issues with separating joint finances, and the difficulties and stress it can cause people as well as helpful tips from Lowell that you can use going forward.

Click on the links below to discover more about dealing with joint debt after separation including research by Lowell and helpful tips to make things easier going forward.

What is joint debt?

Joint accounts can make financial separation difficult

The link between joint finances and stress

The impact joint accounts can have on your debt and credit score

Will my partner's debt affect me?

Helpful tips from Lowell

What is joint debt?

Essentially, joint debt is when two or more people enter into a financial agreement together, this can be between friends, family or partners.

Like any other form of debt, this means that all parties are liable for making sure that the whole outstanding balance is paid off. Once you take a joint financial agreement, your credit files are linked together or ‘associated’ which means that any missed payments will affect everyone involved.

For example, if you have joint finances with an ex then regardless of how much they pay towards the total, you are still responsible for making sure that the whole amount is paid back.

If you’re not sure about your credit file, we’ve already written a useful guide on how your credit files affects you.

Joint accounts can make financial separation difficult

As of 2021, half of all Brits in a relationship have a joint bank account as it makes sharing costs a lot easier. However, when opening a joint bank account, it’s important to make sure you both speak with y our bank and fully understand all of the terms and conditions.

According to our research from July 2021, 47% of people with a joint bank account felt like they were not given the right guidance or advice on what would happen to their account if they were to separate. 

Separation is never easy, and things can be made more complicated if you have joint accounts together. Our survey found that four in ten (39%) Brits found it difficult to separate their finances after splitting from their partner, and 58% believe that their previous experiences of having joint debt with an ex could put them off ever having a joint account again in future.

There are ways to make sure you are protected financially, MoneyHelper has a helpful guide which goes into more detail about sorting out any joint bank accounts after separation.

The link between joint finances and stress

At Lowell, we understand that financial separation can cause a lot of stress when it comes to managing and taking control of your own finances.

With so many people having a difficult experience dealing with joint finances after separation, we wanted to find out more about some of the most stressful events that have occurred for people who have become financially separated from a partner.

According to our research, Brits found that the most stressful part of financial separation was agreeing what to do with the marital home and any outstanding mortgage (46%). Another stressful element of financial separation was agreeing how to split savings, investments, and other funds (30%).

Dealing with joint debts after divorce or separation can obviously be very difficult. Financial matters like joint finances can be complex, and there’s an emotional element that might make things feel more stressful if you have joint finances with an ex. But if you’re worried about a joint debt that’s being managed by Lowell, get in touch with us and we can help you to find a solution, to help you take back control and manage your debt in a way that works for you.

The impact joint accounts can have on your debt and credit score

You might not realise that having a joint account can have an impact on your individual finances. But if you take out credit under a joint account, all people on the account could be liable for any money owed. In fact, 45% of people we surveyed said that when they separated from a partner, paying off debts their partner had accrued was the most stressful part of the financial separation.

Any joint debt that you have with a partner means that you have what’s called ‘joint liability’ for the debt – so if your partner doesn’t make payments, you may still be liable for any joint debts after separation. This can include joint credit card debt, if you took out the credit arrangement together, as well as any other kind of debt where you both signed and agreed to the terms. An exception to this would be other types of accounts such as utilities since you don’t need to sign for this, but you can be held liable as soon as you move into a property.  

This can cause even more stress if your joint debts become unmanageable, or even worse, if they eventually become problem debt. That’s why recognising if a debt is yours is an important step in getting your finances sorted – read our guide on why you may be liable for a debt for more information.

If you’re not sure or can’t remember what accounts you might have open then it’s worth checking your credit report through one of the three main UK credit reference agencies - Experian, Equifax, and TransUnion. If you’re a Lowell customer, you can access your TransUnion credit score through our mobile app.

Another potentially stressful element of financial separation is the impact it could have on your credit score. 31% of people we surveyed said that having their own credit score impacted by their partner’s behaviour was one of the most difficult parts of financial separation.

We’ve written before on how to speak to a loved one about debt, but it can be difficult to talk about financial problems with someone you care about. Even if you live with someone and share everything, finances and money issues are some of the most difficult things to talk about.

Will my partner’s debt affect me?

As we’ve mentioned, if you have joint debt then both people are equally responsible for paying off any outstanding balance. However, if your partner, or ex-partner, has debt in their own name alone then this won’t affect your credit score.

Helpful tips from Lowell

Separations are always difficult, and if you have combined finances then things can get even more tricky. Many people are not aware that when you break up, you are both equally liable for any joint debt – even if it was not you who spent the money.

To make sure things go as well as they can do during a split, especially if you think you’ll be liable for joint debt after separation, these are some steps you could consider taking: 

  1. If you can, communicate clearly with your partner about what will happen with your finances. Talking things over and coming to a mutual agreement can benefit an already difficult situation, however, understandably, this is not always possible.
  2. Ensure that you tell your bank and creditors about your separation as soon as possible so that they can come to an agreement.
  3. To keep things separate from your partner going forward when you receive any future payments, you could move your wage and regular incomes into a different account.
  4. Work out your new budget. Following a separation, your income and outgoings are going to be substantially different to before. You should prepare yourself for this by working out a new budget, so you can understand your financial situation and better manage your finances. Our budget calculator is a really easy tool for working this out.
  5. Along with working out a new budget, it’s worth doing some research and seeing what benefits you might be able to claim. We’ve got a benefits calculator, powered by entitledto, that can help you see which benefits you may be eligible for.
  6. Know that you are not alone. As highlighted in the research, many Brits go through financial separations and although it is not easy, there are many people and organisations out there to help you - so don’t be afraid to reach out. Debt-focused organisations such as StepChange and National Debtline can offer free and unbiased advice about dealing with your situation. Alternatively, Samaritans and Mind are two charities that can help if you need support with your mental health.

When you’re going through a tricky situation like a split or a divorce, dealing with finances or joint debt after a separation might feel really difficult. That’s why at Lowell we’ll always take the time to understand your situation and try to find a way to work with you. If you’re separating from a partner and concerned about a debt that’s managed by Lowell, get in touch and let us know so we can see what we can do to help.

Updated by Stephanie North-Shaw on 28th November, 2022