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Dealing with debt in a break up

26th August, 2016No Comments

When a relationship breaks down and two people who have come to rely on each other part ways, it can be hard to adjust to your new lifestyle. Here are a few ways you can protect yourself financially both during your relationship and once it ends.

Protecting yourself in the relationship

When things are going good, it seems ridiculous to make plans for a financial escape. But it’s better to be prepared then to be left stranded and stressed. When you enter a relationship with someone, your lives become entwined and you take on a share of their responsibilities and therefore, a share of their debt. You also enter into new debt with your partner. Maybe you buy a house together, go on a holiday and have kids. You come to reply on your partner and plan your future around having their emotional, physical and financial support. So when that support network is gone you need to be able to survive on your own.

In your relationship there are things you can do to safeguard yourself and your partner to be able to cope financially without each other. You don’t have to hide money away in a secret account in case you ever leave, you can be up front and honest about what you are doing and get your partner involved.

Keep track of things

In many relationships, one person will take over as the financial planner – the person who knows all the money coming in, all the bills and expenses that need to be paid and where all the savings are. Often, the other person in the relationship will take a back seat and trust the financial planner to take care of all the bills and decisions.

In a breakup, the person who took a backseat to the finances in the relationship is often left clueless. They don’t know what bills they have to pay, what expenses are due, what savings they have and their debt can often spiral out of control. To avoid the post breakup financial fog, make sure you are both involved in the finances. You can do this by writing your household budget down, making all financial decisions together and both actively taking an interest in the day-to-day running of the house.

Have savings.

No matter what stage you are at in life, you should have some savings to fall back on in an emergency. When you are in a relationship you can maintain individual savings accounts or have a savings account together. If things go south, you will both have some money to help you find your feet on your own until you adjust to your new single lifestyle.

Proceed with caution

We often come across people who trusted their significant other with a credit card or personal loan, not realising they were racking up thousands of dollars in gambling debt. Trust is important in a relationship and you should be able to trust your partner in all things, but it is wise to keep an eye on your accounts.

If you relationship ends

Mortgage Repayments

If you purchased a property in your relationship, you will need to deal with the repayments. There are several situations you can find yourself in after a breakup including:

  • One of you has moved out and have stopped making repayments
  • One of your has moved out but you are both maintaining the repayments
  • You are discussing selling the house
  • One of you has offered to take over the mortgage from the other by purchasing their share.

Although speaking to your former partner might be the last thing you want to do, keeping an open line of communication is very important until you sort out the mortgage.

Even if you no longer live at the property, you are legally responsible to make the repayments. If your former partner has agreed to take over the repayments in full, you need to get your name removed from the loan. The reason for this is because if your ex defaults on the repayments or falls behind, your credit file will be effected too.

Similarly, if you have stayed in the house and need to keep up the repayments, you should try to take over the mortgage, even if you need to ask a family member or friend to help you refinance.
If neither of you can afford the repayments on your own, you should sell the property so neither of you has to struggle with the debt.

Joint Debts

Much like a mortgage, if your name is on a joint debt, you are legally responsible to make the repayments. If your former partner defaults on their repayments, the bank might chase you to cover the costs. If you have any joint debts with your ex, you should speak to the bank about refinancing the loan into either your name or your ex partners name.

This way you won’t have to keep tabs on what your ex is doing or worry about the joint debts coming back to haunt you.

Child Support Payments

Breaking up is hard. Breaking up when kids are involved is even harder. Unlike other debts, Child Support Payments cannot be included in a debt relief solution like a Part 9 Debt Agreement or Bankruptcy.

If child support is not affordable for you anymore, you can visit the Child Support Agency to have your repayment amount reviewed. Alternatively, if your ex-partner has stopped paying their Child Support, you should visit the Child Support Agency and they can follow up on the payments owed.

More help with debts

If a relationship breakdown has left you with a massive debt problem, we can help. The experienced staff at Debt Rescue will listen to your situation and advise you on the best way to proceed. We can tailor a debt relief solution to your specific circumstances and help you get back on your feet. You don’t have to struggle through debt alone, expert help is only a phone call away. Enquire with us online and we’ll call you back or you can call us on 1800003328.