Separating Your Finances

People usually follow one of two routes when they are going through a relationship breakdown. They either want an immediate financial solution and do all they can to cut financial ties, or alternatively they completely avoid the financial side of things - sometimes because they haven't been used to dealing with money. Neither option is particularly helpful in getting you through this difficult period.

During a divorce or separation, finances can take a long time to settle and you shouldn't expect things to be resolved overnight. On the other hand burying your head in the sand in relation to joint finances can add to the strain of starting again and moving forward with secure finances.

Research has revealed that the biggest single reason for debt problems is as a result of divorce or separation. Relationship breakdown contributes to 52% of all debt problems.

If there is likely to be a division of assets from a marriage or partnership then you would be wise to contact a divorce law solicitor. The Citizens Advice Bureau can also offer guidance on financial matters during relationship breakdown. For information on debt or on financial settlements and divorce look here.

What financial considerations are important during relationship breakdown?

• Accept that dividing and resolving finances will take time - probably months or possibly even years if the courts get involved.
• During divorce proceedings you may be unable to make changes to joint credit agreements or bank accounts. If possible, try to draw up an early financial agreement which states how debts will be split. Be careful to check joint accounts for expenditure by your ex.
• Remember that everything in joint names means joint liability so it is your responsibility to pay off debts and sever the ties as soon as possible. No matter what you think, creditors are entitled to pursue you for joint debts whoever spent the money. It is important that you protect your credit rating to the best of your ability. Get your UK credit file for free when you trial the no obligation checkmyfile.com Credit Monitor service for 30 days
• Although a court or agreement will mention division of assets it doesn't absolve you of the responsibility of paying. So if your partner is awarded the marital home but the mortgage is in joint names you still have a contractual duty to pay that mortgage until that contract is changed.
• If your knowledge of finance is limited then start learning quick. Make a file; get all your bills out, get copies of bank statements, list joint and personal assets. Know the situation well. Ask for help if you need to.
• Remember that even if you are going through a divorce you have a duty to support each other financially until the divorce is final.
• Help with legal costs is not usually available for a divorce or dissolution of a civil partnership if you are both in agreement.
• Don't be afraid of asking friends and family to support you during the initial period - this should hopefully be short term.
• Keep banks, creditors and other people with a financial interest informed of the circumstances - they can be very helpful and reasonable when they know what is going on.
  

As hard as this period may be you need to take a good look at your financial situation and approach it in an unemotional, logical way. It may be necessary to make changes such as taking on another job, refinancing or moving home. Remember you may find it helpful to use the budget planner to assist with planning your finances.

You can find more useful information about divorce and your finances at Motley Fool.

Follow this link to find specialist financial advisors in your region.

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