New year – new money worries
08 January 2008
The biggest cause of stress is said to be first money then job and last family .
As the credit card bill hits the doormat following Christmas and the January sales we examine the impact of personal financial difficulties and the effect these have on relationship breakdown
According to the Financial Services Authority, 74% of couples find money the hardest topic of conversation with their partners. They also found that 27% of couples regularly argue over finances; 32% lie to their partners about how much they spend on their credit cards; 35% spend sleepless nights worrying about their money situation. Imagine how this affects a relationship?
Couples are faced with even greater concerns if one of them is declared bankrupt and the marriage breaks down. In bankruptcy, almost all of the assets of the bankrupt person are no longer the property of the person declared bankrupt. Instead they are taken control of by a Trustee in Bankruptcy. Their job is to collect all of these assets and sell them. The proceeds are then divided amongst the bankrupt’s creditors.
This could have a serious effect on the bankrupt’s partner, as the matrimonial assets are potentially made much smaller by the bankruptcy. It is unlikely that the bankrupt will be able to pay any lump sum or maintenance to their partner. The bankrupt’s savings will belong to the Trustee instead in order to clear his or her debts. The court may also set aside any money or property transfers if they feel that the bankrupt did not receive something of nearly equal value back.
If the family home is owned in joint names the situation is complicated. It is possible the Trustee can claim against the bankrupt’s interest in the house for many years after the transfer. This means the spouse could still have part of what they thought were their assets taken away from them to pay for their former bankrupt spouse’s debt years after a divorce.
Clearly it pays to be honest about financial difficulties within a relationship. The CAB provides an excellent debt counselling service. The Citizens Advice Bureau (CAB) helped 1.4m people with debt problems last year .In addition a solicitor can advise upon the way in which debt and bankruptcy can properly be dealt with in the event of relationship breakdown.
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