Divorce and Debt: Who Pays Joint Debts and Loans?

Part of: Financial Settlement after Divorce

Divorce and debt run on two separate tracks: the credit agreement decides who a lender can chase, and your financial order decides who should carry the cost between the two of you. Ending the marriage changes neither track by itself. A joint loan stays joint until you pay it off or the lender agrees to change it, and a debt in one name stays with the person who signed for it. What the family court can do is take every debt into account when it divides what you own (Matrimonial Causes Act 1973, s.25). This guide covers who pays joint debts, credit cards and loans on divorce in England and Wales. It forms part of our guide to financial settlement after divorce.

If your ex has stopped paying a debt with your name on it, you can book a free initial consultation and one of our specialists will give you initial advice on your situation.

Divorce and debt: who pays joint debts?

Both of you do, until someone clears the debt. When you borrow jointly, each of you is liable for the whole amount, so the lender can ask either of you for all of it (GOV.UK debt relief order guidance). That stays true after the final order, and it stays true when your financial order says your ex will pay. The order binds the two of you. The lender was never part of your divorce.

There are three ways to deal with a joint debt properly. You can pay it off, often from the sale of the home or from savings before you divide everything else. You can ask the lender to move it into one name, which the lender is free to refuse. Or one of you can take it on, with the order recording who pays. Only the first two take your name off the agreement, which is why clearing joint debts first is often the cleanest route.

Are you liable for your spouse’s debt after divorce?

Not for debts in their sole name. A credit card, loan or overdraft in your spouse’s name alone is a contract between them and the lender. You become liable only if you signed as a joint borrower or as a guarantor. Marrying the borrower did not make you one.

Their debts still count in the settlement. The court weighs the financial obligations and responsibilities each of you has (s.25(2)(b)), so the debts each of you carries out of the marriage are part of the picture when it divides the assets. If a partner took out credit in your name without your agreement, our guide to financial abuse and family law explains how the family court can treat it.

What happens to credit card debt and loans in a divorce?

They follow the name on the agreement. With credit cards, what counts is whose account it is. If you hold an additional card on your spouse’s account, check the credit agreement to see who is liable for the balance, and ask the card company to cancel the extra card so neither of you adds to it.

• Personal loans. A loan you both signed is a joint debt for its full term. A loan one of you took out alone is that person’s debt, even if the money paid for a family holiday.
• Car finance. The debt sits with whoever signed the finance agreement, so decide who keeps the car and who keeps the payments at the same time.
• Joint bank accounts. Joint account holders are normally each liable for an overdraft, so read the account terms and ask the bank what it can do to stop further borrowing.
• The mortgage. Releasing one borrower needs the lender’s agreement. Our guide to who gets the house in a divorce covers it.

How does the court divide debt in a divorce settlement?

The court weighs debts with the assets, as part of one picture, and no formula splits them. You each list your debts in your financial statement, Form E, which GOV.UK says must give a breakdown of your property and debts. The court then weighs your needs, obligations and resources together, and can look at all the circumstances, including who borrowed, when, and what for (s.25(1) and (2)).

Borrowing for the family, such as a loan for the car everyone used, usually counts as shared. Borrowing one of you ran up for their own purposes, or after you separated, can stay with that person. Where one of you had to borrow to keep yourself or the children going before applying, the court can order a lump sum to meet those liabilities (Matrimonial Causes Act 1973, s.23(3)(a)).

Even when the debts are larger than everything you own, an order still matters, because it records who pays what and can end the claims you hold against each other. Our guide to the financial consent order explains how an agreed split becomes binding.

Divorce and debt check: who is likely to pay this debt?

Take one debt at a time. Three answers show who the lender can ask to pay, how the court is likely to see it, and what your order can and cannot change.

What should you do about joint debts when you separate?

These five steps protect your position while the divorce and debt questions between you are still open.

1. List every debt and whose name it is in. Include overdrafts, loans, credit cards, car finance and any debt you are a guarantor for. A copy of your credit report shows the accounts in your own name.
2. Stop new joint borrowing. Ask the bank what it can do to stop further spending on joint accounts, and cancel any additional cards.
3. Keep the payments going while you negotiate. The lender can pursue either of you for arrears on a joint debt, whoever you think should be paying.
4. Say in writing which debts you treat as joint. Name the ones you say belong to your ex, and why, before positions harden.
5. Put the agreement into a court order. GOV.UK warns that if your agreement is not legally binding, a court cannot enforce it, and the court fee for an agreed consent order is £62.

Once the court seals the order, the work moves to carrying it out, including closing or transferring the joint accounts it deals with. Our guide to what happens after a sealed consent order covers that stage.

Divorce and debt: frequently asked questions

General information about the law in England and Wales, not advice on your circumstances.