Skip to content
Family Law

Credit and Debt Management After Divorce: A Practical Guide

Dealing with debt during and after divorce requires careful management and a clear understanding of your legal responsibilities. Learn more here…

divorce debts

Get Legal Advice To Manage Your Divorce Debts

Dealing with debt during and after a divorce requires careful management and a clear understanding of your legal responsibilities. It means prioritising essential expenses and being open with creditors about your new situation.

With the right legal advice, you can manage debts more effectively and maintain financial stability. Planning and vigilance are vital in adapting to your new financial reality post-divorce.

Learn more about:

  • protecting your financial interests
  • budgeting after divorce
  • dealing with marital property
  • refinancing mortgages and transferring titles
  • tax and insurance considerations
  • retirement and estate planning.

Find out more here...

Evaluating Debts: Are They Really Your Responsibility?

Make absolutely certain that you are taking responsibility only for the debts that are yours. Your former partner may try to offload some of their debts on to you. If in doubt, get legal advice.

Check whether the various amounts you owe are:

  • Joint debts – both parties are liable for any debts in joint names. If one party fails to pay, creditors may pursue the other for payment.
  • Individual debts – these are usually the responsibility of the person under whose name the debt was incurred.

When assets are divided, the court typically considers who is responsible for debts. The division of assets might be adjusted to accommodate any inequality created by one party assuming more debt.

Managing Debt Post-Divorce

Consider transferring joint debts into the name of the person responsible post-divorce to prevent future legal complications.

Ensure any agreements on who will pay what part of any joint debts are legally documented. Ideally, they should be formalised through a court order in the divorce settlement.

Regularly check statements for joint accounts to ensure the other party is making payments as agreed.

Tell your creditors about your financial situation – especially if you’re having difficulty paying. Ask about manageable repayment plans or temporary reductions in payments.

But always get expert legal and financial advice before committing to any debt management arrangements, such as offsetting unsecured debts against the value of a property – in the worst case scenario, you could lose your home!

Budgeting After Divorce

Compile a detailed list of all your income, debts, expenditure and assets. Prioritise crucial payments such as your mortgage, utility bills and child care.

See where you can cut out non-essential spending so you can pay back money – reducing your overall debt and your interest payments.

Monitor and record your daily expenditures to ensure you stay within budget. Use budgeting tools or apps to keep track of payments and due dates.

Explore ways to increase your income, such as taking on additional work or using skills that can provide freelance income.

If possible, start an emergency fund – even if it’s only a little money each week or month – to help cover unexpected expenses.

Housing And Living Arrangements

If you’re struggling to pay your mortgage, consider discussing options with your mortgage provider – such as switching to an interest-only mortgage or negotiating a payment holiday.

If renting, you may be advised to tell your landlord so you can negotiate a possible rent reduction or a delay in payment.

But beware, your landlord may use this as an early opportunity to evict you!

Landlords are keen to let their properties to good tenants for the best possible rent. They don’t want tenants with money troubles. Landlords have financial concerns of their own and they don’t need the extra hassle.

So even your hinting at possible future arrears may prompt a landlord to issue you with a Section 21 ‘no fault’ eviction notice.

This will enable them to replace you with a more financially secure tenant – and possibly raise the rent in the process.

It’s the law of supply and demand. As more landlords sell up due to higher taxes and the threat of more government red tape, those who remain in the market now have more power.

So they can push up rents and be fussier when choosing tenants.

Providing For Children

Prioritise child maintenance payments. These are not only a legal obligation but also critical for the welfare of your children.

Be realistic about what you can afford when agreeing maintenance payments – balance these commitments with your need to maintain financial stability. Maintenance payments can be reviewed if your financial circumstances worsen or improve.

If you depend on receiving maintenance, and it’s not being paid as required, you can contact the Child Maintenance Service for help with enforcement. (Child maintenance is a statutory duty.)

If you’re responsible for making payments, ensure they’re realistic – over-committing can lead to financial distress.

Your Credit Health And Legal Documentation

Check your credit report regularly to:

  • ensure all the information is correct
  • monitor your financial health.

Avoid taking on new debts that might compromise your financial stability.

Ensure that all financial agreements reached during the divorce proceedings are documented in the Final Order. This includes the division of assets and responsibility for debts.

Consider a Clean Break Order, which can prevent any future claims on money or assets post-divorce.

Next Steps: Get Expert Help

  • Consult a Family Lawyer. Professional advice is invaluable. Book a chat with a family lawyer to discuss your situation.
  • Financial Planning. Start planning for your post-divorce financial future. Consult an independent financial adviser.
  • Support Systems. Divorce can be emotionally taxing. Support from professionals, friends, and family is crucial during this time.

Latest Articles

Why You Need A Pension Expression Of Wish Form

Why You Need A Pension Expression Of Wish Form

Wills don’t cover pensions. So complete an expression of wish form to ensure your loved ones get the right payouts. Read more…

What Is a Major Works Section 20 Notice?

What Is a Major Works Section 20 Notice?

Whether you're a freeholder or leaseholder, let's discuss everything you need to know about Major Works Section 20 notices. Read more…

Navigating Child Support And Maintenance Post-Divorce

Navigating Child Support And Maintenance Post-Divorce

Learn about child maintenance, financial disclosure, agreements, CMS enforcement if your ex-partner does not pay (or is hiding assets). Rea...