For some people financial concerns are absolutely top of the list of things to worry about when you and your partner/husband/wife separate – how will you be able to manage with only one income? are there any benefits that you are entitled to? etc. But even if emotions and coping with the children’s concerns are your immediate priority, it’s a good idea to try to sort out any money problems and get separate finances as soon as possible.
I’m going to look at four main areas which are important for separate finances: benefit claims; establishing a new address for the person moving out; deciding how to deal with debts; and unlinking your credit records. The division of assets isn’t really a topic for Debt Camel, so all I will say on that is that mediation means less lawyers’ fees and more assets to share.
If you are already claiming any benefits, then one of your first actions needs to be to tell them that you are now single. Unfortunately unless you are on Universal Credit, this means telling everyone separately – don’t assume that if you tell the Job Centre they will inform HMRC (for tax credits) or your local council (for Housing Benefit and Council Tax Reduction). It can take several weeks or longer to get your new benefits sorted out – the change over from a joint tax credits claim to a single claim in particular can be slow, so the sooner this is started the better.
If you had a joint current account before, this is also the time to get a new account in your own name only and get the benefits paid into there.
If you haven’t been claiming any benefits before because your combined incomes were too high, you need to see if now you are single you are entitled to any help. To find out what you could get a good place to start is the Turn2us calculator. You could also visit your local Citizens Advice Bureau.
2. Establish new address
Whoever is moving out needs to establish a new address and inform everyone of it. It’s quite common for people not to bother telling their bank etc because if you are on good terms with your ex, they will pass on your letters. If you are staying with friends or relatives for a bit, you may not think it’s worth the hassle of changing everything. However this can cause major problems for your ex if they have made any benefits claims as a single person. It is now common for people to find their benefit cases are being investigated in detail and benefits are stopped during this because the benefit authorities don’t believe someone is single when their ex’s post is still going there.
People you need to inform include: your bank, your employer, any benefits agencies and DVLC. It’s also a good idea to register with a doctor and dentist where you now live. It can be difficult to supply the proof of address if you are just staying with someone so you don’t have any bills in your name – there is a useful article here on some alternatives.
If you are both planning on staying in the same house but want to claim any benefits as single people, I recommend you go to your local Citizens Advice Bureau and discuss this.
3. Deal with debts
The top priority has to be to prevent any debt problems getting worse. So no matter how friendly you currently are with your ex, it is better to be safe than very sorry so make sure you:
- change any pin numbers or passwords on accounts (including your email account) that your ex might know.
- if your ex has a card on your credit account, inform the credit card company that the other card can no longer be used.
- if you usually use a joint account, open an account in your name only and switch your income and benefits to this new account and also your essential bills. Don’t assume you can safely carry on using a joint account.
Legally splitting up makes no difference to your debts:
- if a debt is in your name, it remains your debt. This applies even if the bank loan you took out was used to buy a car for your ex, or if your ex had a second card on your credit card account and ran up most of the bills. Legally these are both your debts.
- if a debt is in joint names, the creditors can usually chase either of you for the whole amount – the debt isn’t going to be halved so you can each deal with your half.
If your separation is amicable, it’s best to have a conversation about the debts as soon as possible. Your ex may be happy to carry on paying your bank loan for their car. You may both agree that getting rid of the overdraft on your joint account is top priority so the account can be closed.
You also need to insist on seeing evidence that an account has been closed – do not believe your ex if he says he has dealt with it, he may just be saying that because he is going to get around to it soon, or he may think it’s not that important… A bank will usually want you both to say that an account should be closed or changes into only one name, so if you haven’t signed anything, I am sorry but you need to be suspicious.
Sorting out these type of “it’s my debt but I shouldn’t be paying for it / shouldn’t be paying for it all” type of situation is best treated as a priority so that a “clean” separation can be achieved quickly. The biggest problem here is usually a joint mortgage. It is very common for a mortgage lender to refuse to remove one of the names from a joint mortgage. The person that wants to take on the whole mortgage has to be able to clearly afford it on their own, which can be very difficult to prove.
Unfortunately it is usually much more expensive for two people to live separately than together. So if your previous debt situation as a couple was manageable with little trouble, it may now not be so. This can be a very sudden problem and one which you have no experience of. You need to start by making a list of all your debts and draw up a new budget, based on your new income – if it doesn’t look as though the debts are affordable, read A Simple Road Map of Debt Solutions to get a feel for what your options might be.
At this point you may still have a great credit rating and be able to borrow more money. But borrowing so that you can pay off other debts is a very bad idea, as it then means you have a bigger problem and fewer options. It’s better to face up to facts and get some good debt advice on what you can do.
4. Unlink your credit records
You are going to remain linked to your ex financially so long as you still have joint accounts, so it should be an aim to close these accounts as soon as possible.
Once joint accounts have been closed, you should check your credit records with all three Credit Reference Agencies. If any of them are still showing you two as linked, then you can ask for “financial disassociation”, which will remove this link. Here is a page for each of the three Credit Reference Agencies which describes how you need to contact each of them to ask to be unlinked:
Sometimes people ask if it’s worth bothering with this – I think it is. There is no benefit in keeping your credit records linked once you have separate finances – if you have a poor record, it isn’t going to be improved if you are linked to someone with a good record (well not unless you intend to apply jointly for credit, which you aren’t going to do now you have split up!) And if you both currently have good credit records, it’s going to be very annoying a couple of years down the line if you apply for a mortgage and get refused because your ex has messed up ending a mobile contract and as a result has a couple of missed payments showing.
Ending an abusive relationship
It is only recently that the importance of Financial Abuse in a relationship has been appreciated. It is more wide-spread than was thought because people often don’t want to talk about it, perhaps because they don’t realise that it is an important factor. If you are in a safe house trying to rebuild your life, then benefits and a place to live are probably top of your list, not debts, they can wait.. But once you are in a more stable situation, I suggest going to your local Citizens Advice and talking about financial abuse and the debts you have been left with – they may be able to help you get some of these written off, or it may be best to go for a “clean start” with a Debt Relief Order.