Separating your finances after a break-up

Breaking up is hard to do. Find out how to minimise the money issues

Iona Bain – Virgin Money Living Mentor

by Iona Bain | Independent Money Mentor

Founder of the Young Money Blog and author of Spare Change


As if ending a relationship weren’t hard enough, sometimes money is involved, adding a whole extra layer of ouch to the process. But stay strong: separating your finances from those of your ex-partner is a painful but crucial obligation. Consider each area in turn and keep a cool head.

Housing

If a mortgage is in joint names you are both equally liable for the whole loan. But if someone’s moving out, they won’t want to be paying the mortgage. It’s vital to talk to your lender and work out between you how to proceed. Any failure to keep up with payments, even they aren’t your share, will damage your credit rating and could affect your ability to borrow in future.

If you jointly own the property, take advice on the legalities from a lawyer or a housing charity such as Shelter. Future rights may depend on the payments made in the past and any agreement on ownership.

If you’re renting, you have the right to stay put as long as your name is on the tenancy agreement. If it’s not, your ex-partner could ask you to move out. As long as you are joint tenants, either of you can ask the landlord to end or vary the tenancy.

Make sure to take meter readings so that past gas and electricity usage can be split fairly, then phone your supplier to set up a new account.

If you have a home insurance policy in joint names, one person can sign a form or letter asking to be removed from it.

Banking and debt

Joint loans and overdrafts on joint accounts make both of you liable for the entire debt, this means the bank could ask you to repay them if your ex goes on a spending spree. So you should contact your bank or lender immediately, especially if the split isn’t amicable. Both of you will then have to approve all joint account withdrawals, and you might want to redirect your salary. But you might both agree to continue paying rent, mortgage or outstanding bills from the account. As a last resort, you could both agree to freeze the account, but you would both have to agree to ‘unfreeze’ it later.

If you have a credit card account with two cards, the account holder will be responsible for all spending on it. If necessary you could ask the lender to block the second card, but you might want to avoid this if agreement can be reached.

Money in a joint savings account belongs equally to two spouses or civil partners. Otherwise it belongs to the person who originally paid it in. Someone who hasn’t made a contribution to a joint account could make a claim for a share of it, but it can be difficult to prove entitlement.

Your ten point checklist

  1. Contact your mortgage lender or landlord
  2. Act quickly if a split is not amicable
  3. Check status of a mortgage or tenancy agreement
  4. Remember each person is liable for joint debts
  5. Protect a credit card account
  6. Try to reach agreement on debts and bills
  7. Aim for an orderly rundown of a joint account
  8. Prioritise rent or mortgage payments
  9. Investigate how to protect your credit rating
  10. Take out the emotion and aim for a planned transition

And finally, best of luck with it all – a breakup is always horrible, but at least you can minimize the financial fallout.

Before making financial decisions always do research, or talk to a financial adviser. Views are those of our mentors and customers and do not constitute financial advice.