When couples divorce, they often think about dividing assets – the house, pensions, and savings. But what many don’t realise is that debt in divorce is also part of the financial settlement, even if it’s in one person’s name. With the cost-of-living crisis putting pressure on household finances, debt is now the second most common issue discussed in family mediation, after child arrangements.
One of the biggest misconceptions about divorce is that debts in one person’s name remain their sole responsibility. However, in England and Wales, family courts consider both assets and debts when deciding a fair financial split. This means that:
What happens to Debt In Divorce?
- Joint debts (e.g. mortgages, loans, credit cards in both names) remain a shared responsibility unless refinanced or legally reassigned.
- Sole debts may still be considered in settlements if they were accrued for the benefit of the family.
- Until a financial order is in place, both parties remain financially linked, meaning missed payments can impact both credit scores.
How Does Debt Affect Divorce Settlements?
Many divorcing couples only realise the full extent of their financial obligations after they start dividing assets. One person may expect to keep the family home, but later struggle with mortgage repayments once they factor in debts and legal costs. One partner may assume they are free of responsibility for a loan in their ex’s name, only to find that the court includes it in the financial agreement. Some individuals find themselves taking on more debt post-divorce – such as covering the full cost of the mortgage or rent while awaiting a settlement.
How Can Mediation Help with Debt in Divorce?
Debt can be a significant source of conflict during divorce. Instead of costly and lengthy legal battles, mediation provides a structured way for couples to agree on how to handle financial responsibilities fairly.
Mediators help divorcing couples to :
- Understand their full financial picture, including debts and liabilities.
- Discuss repayment plans that work for both parties.
- Negotiate asset division while considering outstanding debts.
- Avoid costly legal disputes that can worsen financial strain.
Support Available
For those struggling with the financial burden of divorce, there are options to help keep your costs down including :
- The Family Mediation Voucher Scheme which provides up to £500 towards mediation costs for parents, making it more affordable to resolve issues amicably.
- Legal Aid for mediation is also available for those on low incomes.
If you’re navigating separation or divorce, mediation is a more cost-effective, faster and much less stressful alternative to court, to help you find a fair resolution without unnecessary conflict. Find out more about mediation.
You can book an appointment, or request more information on family mediation here.