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What happens to joint debt whilst awaiting a divorce?

(21 Posts)
Autumn12 Fri 10-May-13 12:49:22

My mother is beginning divorce proceedings against her husband who has been cheating on her. They have several thousand pounds worth of debt. These debts are all in my mothers name but were jointly incurred.

Her "DH" is saying that he will not be paying off these debts once he moves out as he "cannot afford it". She will not be in a financial position to pay them either as she is being left with a low income and a teenager to care for. She is already in a position where she is being forced to work less hours in order to receive the financial help she will need to keep a roof over her head.

Am I right in thinking that her soon to be ex is liable for half of the debt? Her solicitor has told her so, but I don't think my Mum believes that he will be forced to pay. also, clearly a divorce could take months to go through. What happens to the debt in the meantime? She won't have the money to make the repayments until the situation is sorted out legally.

Thanks in advance!

CogitoErgoSometimes Fri 10-May-13 13:54:42

I'm surprised the solicitor said that the ex was jointly liable. My understanding is that personal debts remain the liability of the named person, even after the divorce. That's how it worked in my divorce at any rate... thank goodness. He had run up huge personal credit card bills and a big overdraft on his personal account. I was not deemed liable for any of that.

carriedawayannie Fri 10-May-13 14:08:18

Cognitio is right AFAIK. You can only be chased for the debt if your name is on it.

So joint debt means you are responsible for the whole debt and can be chased for it all.

Debt in her name is her debt and marriage or divorce doesn't change that.

Your mum needs to contact payplan asap. They are a debt management company recomended by citizens advice.

They do not charge for their services and are reconised by most financial institutions.

Your mum will have to do a financial statement with them on which she declares all incomings and ougoings.

Her surplas income will be calculated. Then payplan contact her creditors and offer them a reduced payment based on your mums financial statement. If you are with payplan then they should all accept the reduced payment.

Then your mums pays payplan each month and they forward the payment onto the creditors.

Some creditors will freeze interest and charges as long as regular payments are maintained via payplan.

Its so important that your mum acts now and doesn't wait for the divorce as every missed payment will incur charges and thus more debt.

At least that's what my sister was told.

Restorer Fri 10-May-13 14:13:08

I agree, I'm afraid. if the debt isn't in joint names, it isn't a joint debt.

Is the solicitor maybe referring to distributing assets, the value of which would be calculated on a net basis, after deducting any debts?

Autumn12 Fri 10-May-13 14:14:41

Oh god then if he isn't liable she is in big trouble. It's all catalogue debt in her name but it's all joint household purchases like sofas, TV's etc.

He also used to get a new mobile phone handset each year at several hundred quid a pop. The guy is turning out to be more of an arsehole at every turn.

She is seeing the solicitor again today so maybe they will clear up the confusion.

carriedawayannie Fri 10-May-13 14:22:18

She'll be fine if she enters a debt management plan. She will be left with enough to live on, pay bills and rent\mortgage.

She won't be living it up but she will be in control and slowly paying off the debt.

Instead of waiting for the solicitor she needs to phone payplan today who will be able to help her and give her a rough idea of how much she will need to pay each month towards the debt.

Autumn12 Fri 10-May-13 14:22:23

There are zero assets to the marriage. They live in a council house and the he has a car on motability. Nothing else to divide up.

He has not moved out yet (he is being difficult about it and expects to be able to stay until he and OW get a council place), so as of yet the repayments are still being made from their joint account. It's once he has moved out that she will be in trouble.

There is NO surplus income from her side once his income is removed from the equation. Her earnings do not even cover rent and bills, let alone food etc. She has been told she has to reduce her working hours in order to qualify for housing benefit as she is earning just over the threshold.

carriedawayannie Fri 10-May-13 14:23:40

Payplan will also know the ins and outs of who will be held responsible for the debt.

carriedawayannie Fri 10-May-13 14:24:42

Whose name is the tenancy in?

Autumn12 Fri 10-May-13 14:26:02

Tenancy is joint names

carriedawayannie Fri 10-May-13 14:30:24

I think your mum needs more advice rather than just debt advice tbh.

Maybe you should post again with a different thread title to get help with her whole situation.

She needs to find out which benefits she can claim. Has she found out about tax credits?

carriedawayannie Fri 10-May-13 14:31:24

I mean the amount of tax credits she will get once she reduces her income and is a loan parent?

Autumn12 Fri 10-May-13 14:34:35

Thanks but she has already had advice from CBA, and is seeing her solicitor as we speak. She knows what she can claim, though I'm not privy to all the info.

I am only asking about her debt situation as I was thinking that it may be a while until teh finances are sorted with regards to the divorce. It looks as though she may have had bad advice from her solicitor re them being jointly liable for the debt though. I will speak to her later today to clarify.

Thanks again!

carriedawayannie Fri 10-May-13 14:36:52

Use the benefit calculator on www.entitledto.co.uk. I can't do links as on phone

Input what her income will be and put her down as a lone parent.

See what her income is then and if she gets help with council tax as well.

carriedawayannie Fri 10-May-13 14:37:41

What makes her h think he is entitles to a council house with ow?

Spero Fri 10-May-13 14:43:59

Debts in one spouses name can still be considered by the court to be a joint debt if evidences provided to show that the money borrowed benefitted both spouses. the court cant haventhe debt put into,jointnnames, but they can juggle with other assets to make it fair.

However, this is no help all if the spouse who isn't named has no money/assets - then whoever had the debt will be chased by the person/organisation who loaned the money.

Autumn12 Fri 10-May-13 14:48:38

I'm not too worried about what she is entitled to claim - just the debt part at this point. If she has to pay it off alone she is going to be saddled with it for years and years to come.

I don't know why he thinks he is entitled to a council place, but seems that he is as he was viewing some flats the other day. I don't think they know its for him and OW too though. He has some disabilities so maybe that bumps him to the top of the list.

carriedawayannie Fri 10-May-13 15:01:52

That probably explains it.

What she is entitled to will have a big impact on if she will be able to enter a debt management plan.

If he has no assets, then it seems she is responsible for the debt alone. Which means she has four options:

1. Pay the full amount each creditor wants each month. Seems unlikely she will be able to afford this.

2. Enter a debt management plan with a non charging reputable company and pay reduced payments until the debt is clear. This will take years.

3. Enter an IVA. This will last four years and will be a set amount a month, normally a higher amount that you would pay than if you were in debt managment company but with the added bonus of ending in 4 years regardless if the debt is paid off. You have to account to a finance officer and declare all incomings.

4. Bankruptcy. Which will clear all debt but will leave her unable to get credit for a long time. She also has to prove she is unable to pay the debts. I don't think its an easy option.

There is no quick soloution and options 2-4 will mean she can't get credit for a long time.

keli5325 Fri 10-May-13 15:11:53

If your mum meets the following criteria she will qualify for a "DRO" Debt Relief Order"

•Owe less than £15,000 in unsecured debts
•You can’t be a homeowner
•Have no more than £300 in assets (although you can have 1 vehicle worth up to £1,000)
•Have less than £50 a month left over after you’ve paid all of your living costs

Have a read here http://www.stepchange.org/Debtinformationandadvice/Debtsolutions/Debtrelieforder.aspx

Autumn12 Fri 10-May-13 15:30:17

Thanks I will send the links to her.

keli5325 Fri 10-May-13 15:32:15

Sounds like she might qualify and it only costs £90 - good luck :-)

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