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Debt and divorce – Understanding liability and what happens to marital assets

Sharon McDougall - Updated - 30th April 2024 - 3 minutes to read

*Please note we can't assist with marriage counselling or legal advice relating to divorce. We can help if you are based in Scotland and struggling with personal debts due to divorce or financial recklessness from your partner.

Just as marital assets are divided during divorce proceedings, responsibility for debt incurred during the marriage will also need to be split. Various factors affect who is responsible for marital debts, however, including whether the borrowing is in sole or joint names, and if it was taken out before, during or after the marriage.

The ideal solution to the problem of marital debt is to pay it off prior to divorce, but this can be difficult when couples are already struggling to stay in financial control.

What is joint and several liability in divorce?

One of the issues surrounding repayment of debt during divorce is that even if one party is instructed to pay off a debt by court order, if they fail to meet repayment terms the other partner could still be pursued for payment.

Financial court orders in divorce are not readily recognised by lenders who simply want to recoup their monies. If the original credit or loan agreement contained two names, then both parties are seen to be jointly and severally liable.

Joint and several liability means that you become liable for the full amount outstanding, and not just your half. One exception to this is with credit card debt. The only person responsible for repayment in this case is the account holder – additional card holders are not liable for any of the debt incurred.

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What happens when paying off a mortgage?

If joint names are on the mortgage application, you could both be pursued for the full outstanding balance on the loan. Selling the property may be the only option if neither party can afford to, or wishes to live there.

Should one party prefer to remain in the marital home, the house will be valued to allow calculations for dividing up the sum. If there is equity available, the person remaining in the house will be required to buy out their partner.

On the other hand the property may be in negative equity, in which case whoever is leaving the marital home will need to pay an agreed amount to the lender, so that their share of the mortgage is repaid.

When was the debt incurred?

This often defines who is responsible for repayments. If the borrowing was made before marriage or after the break-up, and the funds were used for the benefit of only the applicant, then that person will be liable for the outstanding balance.

There may be exceptions to this if money was borrowed prior to getting married, but the marriage was long and both parties benefitted from the money – if it was used for home improvements, for example.

How are assets divided up?

The courts generally base a decision on the division of marital assets by taking into account some or all of the following factors regarding both partners:

Children’s needs are always placed first in divorce cases, but it is impossible to generalise after their requirements have been addressed. Each divorce case is viewed individually, with a 50/50 split being just the starting point for negotiations in many cases.

An important point to remember is that you and your ex-partner will continue to be linked financially by credit reference agencies unless you issue a notice of disassociation. Should your ex-partner run up huge debt, your own credit rating will be adversely affected through no fault of your own unless you take this action.

Scotland Debt Solutions operates from offices around Scotland. We offer a free same day meeting for all our clients, and can provide professional advice and guidance for all debt-related situations.

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Sharon McDougall


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