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Divorce, debt and not scorching the earth Article by Bev Budsworth

Published on:November 22, 2015Author:The Debt Advisor

I quite often mix my metaphors which provides entertainment to the family.  However, when referring to divorce and how couples treat each other – Scorching the Earth is spot on.

For those who have travelled down the dark cold road of divorce, they will very well know how divorce can inflame bitter feelings, incite tense emotions and provoke people to behave in a way which is almost alien to their personality.

Debt and Divorce

These are 2 of the 3 D’s which in my view are most debilitating in our lives. The 3rd is death which needs no further comment.

Debt is very definitely taken into account when couples divorce.  If one or both of the parties have debts that they cannot pay, this tips them into possibly being insolvent and the courts will want to see that the debt has been factored into any settlement.

It is not easy to have a sensible discussion about assets, family, income and expenditure but it could save thousands and much misery for one or both partners.

We have over the 16 years that the business has been in existence helped many separating couples deal with debt. The options can include separate IVA’s, or interlocking full and final IVA’s offering lump sums to settle the debt whether it’s in sole or joint names.

Another alternative is informal discounted settlements as highlighted by the case below.

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Kelly Ann’s background

Kelly Ann and her husband approached The Debt Advisor team as they were struggling with debts totalling £34,500 with minimum payments which exceeded £1,000 per month but after reviewing their income and outgoings their surplus was £150.  Their options included an informal debt plan or a more formal plan, an IVA. They were very keen to avoid formal insolvency although the option was revisited frequently.

How did a debt management help?

Team TDA set up a debt management plan for Kelly and her husband paying £150 per month . Creditors were supportive and interest and charges were frozen.  But the stress of the debt had caused a rift in their marriage and they ended up splitting a few years later.

During the time TDA looked after Kelly Ann and her husband’s debts, their monthly payment did increase but as a result of the split the payment had to reduce to £80. There was also a period, whilst Kelly Ann was waiting for their house to sell, where no payment could be afforded and TDA were able to get creditors to agree to freeze action.

Settling their debts with discounted settlements.  

Following the sale of their marital property in February 2015, Kelly Ann approached the TDA team to help her and her former husband put forward discounted settlement to their creditors. At this stage their debt totalled £28,444. The settlement offered was £14,222 and creditors all accepted the offer which gave them 50% return on their outstanding balances.

What their situation is now:

Kelly Ann and her husband have gone their separate ways but during the tough times, TDA were there to help deal with their debts and keep at bay, to a degree, financial pressure from their creditors. Both of them now have a chance to a new life without the burden of debt.

Kelly Ann’s comments

“Thank you so much for the way you conducted yourself throughout the whole process of negotiations with my creditors. You were so respectful and very understanding at this incredibly difficult time in my life and for that I can’t thank you enough. In fact prior to the sale you were very supportive – I am so pleased to see the outcome you have achieved. I think the Debt Advisor were an excellent company for the purpose of minimising our repayments, but being debt free tops it all. Once again a HUGE thank you for all of your hard work”

Getting Help

If you are struggling with debt as well as relationship issues, speaking to an independent professional that can help with strategies to clear the debt can help eliminate a really difficult issue.

Pick up the phone and have a chat. I and our team are always happy to have a chat and provide some ideas of how to deal with your debts.

All debt solutions need to be carefully considered. IVA’s are formal solutions and failure to keep to the terms can result in your IVA failing and you could end up bankrupt.

There is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit www.moneyadviceservice.org.uk.

The Debt Advisor is authorised and regulated by The Financial Conduct Authority (reg no: 606669). We are also a member of the Debt Resolution Forum and we adhere to their codes and standards.