Breaking up is hard to do, but breaking up financially can sometimes be even harder. According to research by Experian, almost half of people who have ended long-term relationships don’t know how to financially break up with their exes, despite over half admitting that they shared a joint account. With the average breakup costing £1,068 and financial reasons being a major factor in most breakups, it’s important to know how to disentangle everything from joint accounts to credit reports.
So, where do you start? Here are some tips from financial and legal experts:
1. Get organised
Create a good filing system, both paper and electronic. Set up a new email address to use for all correspondence about the breakup and to forward relevant emails to. Set up electronic folders by category so you can organise emails and find things again easily as you go through the process. Make a list of all your assets and liabilities and all sources of income in your relationship. Start to gather tax returns and financial statements including bank, investment and retirement accounts as well as your mortgage, credit cards or any other debt.
2. Check your credit reports
Before you say goodbye to your ex, take a look at your credit report as that might be the last thing linking you to them. Chances are you’ve linked your finances at some point, whether it was to pay the bills or purchase household items using joint credit. Ask for a free statutory credit report from the three main credit reference agencies, Experian, Equifax and TransUnion. This will show all the accounts, jointly and singly, held in your name. Pay off, close or transfer into one name any joint accounts and credit agreements, such as bank accounts, utilities, loans, etc. Once you have closed the joint accounts/agreements, to avoid having your ex’s future financial decisions affect your credit applications, ask the credit reference agencies to remove them from your report.
3. Joint bank and savings accounts
Any jointly held bank and savings accounts are held equally between the named parties. If the balance is £100, they each legally hold £50 in that account, regardless of the proportion of the £100 credit they originally contributed. And this applies in the same way to debt on a jointly held account, too. Joint account holders are advised to be cautious about overdraft facilities, because regardless of who accrues the debt, they are both equally liable for its repayment. While closure of an account requires joint consent, it is possible for just one partner or spouse to freeze an account. It requires very little, a click in the banking app or a phone call to the bank, and the account will be immediately frozen, preventing either party from using their cards and accessing the funds in the account.
4. Credit cards
A credit card can only be held in one person’s name, with another person being a named cardholder. And the credit card company can only enforce payment against the original account holder, not a named secondary cardholder. But a credit card account cannot be closed by the party who is the secondary cardholder. The person whose name is on the account can cut off the secondary cardholder at any time, without that secondary cardholder’s consent.
5. Mortgage/jointly owned property
It’s important that you talk to your lender if the mortgage is in both your names as you’re both equally responsible and liable. If one of you is unable to continue with the payments, the other will have to shoulder the burden or the mortgage will go into arrears. The same applies to jointly owned property.
Breaking up financially can be stressful, but it’s important to take the necessary steps to protect your credit and your assets. Keep communication open and seek legal and financial advice if you need it.
– 47% of people who have ended long-term relationships don’t know how to financially break up with their exes, according to Experian.
– The average breakup costs £1,068 and two-thirds of couples admit they broke up because of financial reasons, according to Experian.
– Joint account holders are advised to be cautious about overdraft facilities, because regardless of who accrues the debt, they are both equally liable for its repayment.
– Get organised and create a filing system to keep track of all financial documents.
– Check your credit reports and close or transfer joint accounts.
– Be cautious with joint bank accounts and credit cards as both parties are liable.
– Seek legal and financial advice if necessary.
In conclusion, breaking up financially can be tough, but it’s important to take the necessary steps to protect your credit and assets. Keep communication open and seek advice if you need it.