BREAKING up is hard to do, the song goes, and it’s even harder if your finances were coupled too.
Splitting with a partner can be made more complicated by money and in the worst case, could leave you out of pocket for thousands of pounds.
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The extent of your financial relationship can depend on if you were living together or not, as well as if you have shared assets like a home.
If you’re married and separating, with or without children involved, things are likely to be even more complicated.
But there are three things you can do in the immediate aftermath of any split to protect your finances.
Sarah Coles, personal finance expert at Hargreaves Lansdown said: “You may think that once you’ve finally broken up with a really terrible ex, the worst is over.
The dangers of joint bank accounts
A joint bank account lets you manage money you share with your partner, housemate or others. It’s convenient – but there are risks.
- If one of you has a poor credit history then it could affect your credit rating
- An account holder can take money out without your consent
- If the account becomes overdrawn then you’re both liable for the debt
If you’re having problems with an account holder then you can ask your bank to freeze the account.
The bank will only unlock the account if everyone agrees on how to split the money.
“But financially they still have the power to hurt you, so if you’re going through an acrimonious break-up, there are some steps you need to take to protect yourself.”
One mum had to pay £7,500 of overdraft and credit card debts left behind by her ex.
Another woman’s boyfriend racked up £26,000 worth of debts in her name.
If it’s proving a struggle to deal with your ex when it comes to money, you can find support so you’re not managing alone and often it’s free.
Sasha Evans, money expert at MoneySuperMarket said: “My first piece of advice following a break up is to try talking first, if you’re struggling to be civil or to come to a solution, consider using a mediation to get you through any difficult or painful discussions.
She recommends an organisation like Relate can help here, but it could be useful to speak to a solicitor for third party advice or Citizen’s Advice.
Whatever your situation, you should always be honest with your ex-partner, Ms Evans adds.
Here’s the steps you can take after a break up to protect your money.
Freeze joint accounts
Closing any joint accounts and credit cards you had together can help prevent disputes over payments.
Ms Evans said: “A practical step forward is to close down any joint accounts, or if your account is overdrawn, you should freeze it to avoid either of you being able to run up even further debt.”
You’ll be both be responsible for repaying an overdraft on a joint account even if it’s your ex who used the cash.
Ms Coles said: “If they refuse to pay a penny, you’ll end up repaying it in full. If you think this is a risk, you can freeze the account, so you both have to agree before either of you can spend any money.”
While joint credit cards are not a thing, couples can often have a second card for a partner on their account, Coles adds.
“If you’re the primary card holder, you’re liable for spending on both cards, so it’s a good idea to block it.”
Tackle debts and bills
Shared debts are also something to look at sooner rather than later.
While you won’t be able to close or freeze the account like with a joint account, you’ll have to agree between you who’s continuing to pay for what.
Ms Evans said: “If your debts are shared, you will both be responsible for paying off them off – so if one partner stops paying off the debt, the other person will still be responsible for settling it.
How to cut the cost of your debt
IF you’re in large amounts of debt it can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis – knowing your spending patterns is the first step to managing your money
Work out your budget – by writing down your income and taking away your essential bills such as food and transport
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum – If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner – If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts – If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don’t pay
Get advice – If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
For outstanding bills you also have joint liability if they are in both your names – even after you move out.
“If your ex doesn’t pay the bills it could affect for your credit rating,” explains Ms Coles.
“It’s a good idea to take meter readings when you move, and contact the providers to let them know you’re no longer living there. Close accounts in your name, and ensure your name is taken off any joint bills.”
Unlink your credit score
It’s not just the shared costs themselves which can hit your pocket either – there are implications for your credit score.
If you’ve had joint financial agreements like a loan or mortgage, this can impact your credit score says Norton Finance.
You can also be financially linked if you have joint money obligations like bills, and this could cause problems.
The financial firm recommends after closing joint accounts, check your credit report straight away to make sure your ex-partner has not put you on their credit accounts without your knowledge.
You’ll also be able to see where you need to remove any financial associations so you’re no longer linked.
Ms Coles said: “Living with someone isn’t enough alone to link your credit records, but having a joint financial product will.
“Even after the account is closed down, the link will remain, so if they run up big debts or miss payments, it will affect your record.
How to improve your credit score
WE explain how to improve your credit score.
- Don’t make too many credit applications – Making lots of requests in a short period of time can be seen as a sign of financial distress – and each application will be recorded on your file. Use a “soft-search” eligibility calculator to show how likely you are to be accepted.
- Always pay your bills – Late payments are also recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
- Pay down your debt – Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already have a large amount of debt.
- Use a credit-builder credit card – These cards tend to have high interest rates compared to normal cards but if you can show you’re a responsible spender with them, it can improve your chances in the eyes of lenders.
“Get in touch with the credit record agencies, inform them of the split, and ask for a notice of dissociation.”
Even when you’ve closed a joint account you’ll still need to contact credit reference agencies to cut ties.
Until this happens, any transactions from your ex-partner could potentially impact your own credit report.
If you change your name after a divorce you can still remain financially linked until this association with your ex is removed.
You may also want to set up alerts for unusual activity.
Paul Stringer, director of Norton Finance Group said: “You can also set up fraud alerts on your accounts so you will be notified should there be any activity that would suggest identity theft.”
Plan for your next financial relationship
While it may be too soon to think about another relationships, there are some things worth thinking about to better protect your cash in future if things don’t work out.
Now you understand how your finances can end up connected and the impact of splitting, you can use the information to help you decide how to divide your finances next time.
With more couples choosing to live together outside of marriage, a co-habiting agreement can also set out where you stand.
It’s an official agreement setting out your rights that’s recognised by the courts, and you’ll need a solicitor to draft one.
A living together agreement can cover shared responsibility for your children, ownership of property which you live in, and ownership of jointly owned possessions, says Citizens Advice.
Having your own emergency savings separate to any joint accounts and shared money or assets can also be useful to fall back on.
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This “secret” stash of cash is often called a f*** off fund.
Ms Coles said: “It’s not going to help you this time round, but if you ever go through this again it can make an enormous difference if you have an emergency savings account in your own name.
“If your ex forces you to freeze a joint account it means you’ll still be able to meet everyday costs, or use it for legal advice, or to cover gaps in mortgage payments.”
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