Divorce is not unusual today and the path of decision to effective separation can be relatively short. For example, Belgium had 24,310 divisions in 2014 according to the General Direct Statistics Belgium. But that does not mean it’s easy when two partners suddenly take their own way. The emotions can be high and you also face a lot of financial and legal challenges in divorce. What about, for example, if you still have loans?
Divorce is not just settled. In addition to the administrative and legal issues, you must also arrange your financial affairs with your ex-partner. These things do not only deal with, for example, your joint house or car, but also the possible outstanding loans. Consider, for example, the ongoing renovation work on the family house.
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What happens to my outstanding loans on divorce?
According to the bank, who signed the contract of the loan was also bound. Therefore, if you have concluded a loan together, the bank can recover money from you. Even when one partner endorsed the loan and the other assured the other, both are responsible for the payment. This is independent of your marriage system.
If married or legal cohabitants, you may even be required to pay back a loan that was terminated by your partner and for which you were not guarantor. The extent to which this is the case depends on your marriage system.
Read our article: What are your rights with a loan?
Who has to pay back depends on your marriage system
What happens to debts still to be settled depends largely on your marriage status and marriage contract. There are four possibilities:
- You are living together in law or in factWhen you co-exist legally or in fact, you must respect your own contracts. In this case, each partner is responsible for the debts he only commits. However, if your legal cohabiting partner can prove that the loan served for family needs or for the children’s upbringing, you are responsible for the debts.
- Married under the legal system
The legal system is automatically effective when you marry unless you and your partner choose to divide the ability differently. The legal system actually divides the assets of the partners in three: the ability of one spouse, the other spouse’s ability and the common equity. Divorce will only divide the common goods. All debts incurred during marriage are deemed to be in the interests of the family and thus fall into the marital community. The bank will be able to address both the common ability and the spouses’ own abilities. In addition, both partners in the legal system are required to sign the loan.
- Married under the legal system
You can use our comparison tool to see which loan suits you best.
- Married under the system of divorce of goods If you are married under the system of divorce of goods then there are two separate assets. Spouse retains ownership of own goods and income and responsibility for own debts. The debts made by one of the marriage partners before or during marriage remain personal, which may also have been the cause of those debts. The only situation in which both partners are responsible for the debts is when both partners have signed a loan.
- Married under the system of overall community of goods This form involves more risk. Everyone does not only pay for his personal debts, because all debts are deemed to be common. Creditors can appeal to both the common and the equity of the spouses to settle debts.
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What about the mortgage loan?
In addition to personal loans for, for example, a new car, you may have entered into a mortgage loan. In that case there are three options:
- You sell the house on which you took a mortgage. The bank will then be refunded with the money from the sale. If this is enough, you have repayed your debt. If not, you will have to pay the remaining amount with your ex partner. The bank can both assist you for the redemption.
- Your partner buys you out. In this case, your partner not only takes over the house but also the corresponding debts. These agreements only apply between you and your partner. The bank is not obliged to keep this in mind until you inform the bank and obtain approval. The bank must check whether the other partner is able to pay off the debts only and, if necessary, provide additional guarantees.
- You will keep the house. In this case, you and your partner will be together for a certain period of time against agreed terms.
Can I apply for a new loan after my divorce?
If the divorce is not yet final, a new debt still falls within the community with the legal system or community of goods, leaving both spouses responsible.
Once the separation is over, you can use a loan to buy a new car after the loss of the family car or for a new unit. Of course, it is also possible to use the loan correctly to cover the cost of a divorce.
Consider, for example, partner implementation or even child alimony. Only borrow money if you really need and can handle it. Make sure that you can continue to pay the loan after the divorce procedure and the distribution of money, goods and debts. Please read our article on tactical credit.