You could end up with debt that isn't even yours!

MoneyIf your relationship comes to an end, you could end up with debt that's not of your own doing!

If you go through a divorce or separation - whether it's amicable or not – debt can all-too-quickly rear its ugly head. But it can also lead to debt even when you've not overspent at all.
Every day we hear that divorce or separation has been the main contributing factor towards a debt situation. It's far from uncommon. And as we found last year, 9% of our clients were left in debt as a result of a divorce.

No one ever expects the worst to happen to a relationship, but we know that, all too often, debt is the major outcome.

Many people would claim to never make a financial decision lightly, but who thinks twice about opening a joint account with a long-term partner or spouse? Only the financially savvy or shrewd would give it much of a thought.

What happens if you had a joint account and you split up?
You might think that as long as there are no debts when you split there's no problem. Wrong. If you leave the account unchanged your ex-partner could quite easily increase the overdraft limit without you knowing.

Of course this isn't a problem if they maintain their payments and don't fall into difficulties. But with the cost of living constantly rising and the economy unsettled there's no guarantee that someone's circumstances won't change fairly quickly.

Here's where the problems start
It can be difficult to remove your name from a joint account, so if you weren't able to do this it could also mean the lender isn't aware of your new address.

If your ex isn't paying, the debt could be mounting up without your knowledge. Worse, if they don't have your contact details it could be months or even years before the debt catches up with you.

When you took out the joint loan you might have been reassured that the debt would be sorted in a divorce settlement should you end up splitting.

But what happens if your ex-partner's financial situation changes after the divorce? Do you still have to pay?

This would depend on the circumstances, but if they resort to a form of insolvency such as an IVA, DRO or even bankruptcy you would be left to foot the remaining bill, despite any divorce settlements.

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You could end up with debt that isn't even yours!

If you wear a uniform of any kind to work and have to wash, repair or replace it yourself, you may be able to reclaim tax paid over the last four years. For some people, this could mean a windfall worth hundreds of pounds

The interest you receive on savings accounts (with the exception of cash Isas) is automatically taxed at a rate of 20%.

Higher-rate taxpayers therefore tend to owe money on the interest they are paid throughout the year. If, however, you are on a low income or not earning at all, you should be able to claim all or some of the tax deducted back

You can apply for a refund of vehicle tax if you are the current registered keeper or were the last registered keeper of your vehicle that no longer needs a tax disc

If you pay tax on a company, personal or State Pension through PAYE (the system employers use to deduct tax from your wages), you may well end up overpaying

There is a limit to the amount you need to pay in NI, whether or not you work for an employer.

Instances in which you may find that you have overpaid include if you work two or more jobs and earn more than £817 a week and if you move from self-employment to employment, but continue to pay Class 2 National Insurance contributions

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Think about the consequences
Everyone should think very carefully before taking out any joint credit agreements. Whether the reason is love or more practical reasons, like jointly paying the bills, joint debts can be fraught with disaster.

It's vital to think about what would happen if you were left to pay any amount outstanding before signing any forms. Could you cope with the repayments and afford to clear the debt yourself? Most joint applications are based on a joint income so the chances are you couldn't.

Always think twice before you sign the agreement.

We know that most people don't take out a joint debt knowing that the relationship will come to an end, so that's why it's even more important to know where you stand should the worst happen. And should it occur, it's best to inform the bank of your change in circumstances straight away.

We don't have a crystal ball to predict what will happen in the future, but if you've made bad financial decisions in the past, we're here to help.

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