What happens to couple loans if we separate?

They are data of the General Council of the Judiciary. Joining a separation process with a fight over the custody of loans that the couple has in force can be complicated.

When seeking funding, it is normal for couples to join forces. And apply for personal loans together. The financial stability provided by two holders with their respective income helps a lot when they approve the loan. Also when it comes to getting better conditions. But what happens to those loans if the couple dissolves?

Love ends but the debts are still there

In these situations, the first thing to keep in mind is that, even if you are separated, there are still two holders for the bank. And therefore two responsible for repaying the installments of personal loans you have. Therefore, finding a solution that is beneficial to both parties is paramount, they say from the financial product comparator MoneyTip.

The simplest option for both parties would be to repay the entire capital of the loan and cancel it. Once the debt is settled, the problems are over too. However, this is not always feasible because loans are not always financial physical goods, such as a car, which can be sold to pay off credit.

If the option to cancel the loan is not possible, there are several more or less simple alternatives, which will adapt better or worse to your situation (and that of your former partner). The simplest, for the few procedures involved, is to create a joint account. This would work,  only and exclusively, for loan repayment. Monthly, each one must enter in it the part of the quota that corresponds to him. The disadvantage of this alternative is that there must be a mutual confidence that both will meet their income.

Alternatives that give less problems

Alternatives that give less problems

The alternative that will cause less problems will be to make a change in the loan holder . One of the two parties will be the one who becomes the only person responsible for the refund. This solution requires more procedures than the others and the collection of commissions to carry out the change of the contract. The drawback is that the bank must assess whether the person who remains as the sole holder has the optimum economic level to face the loan. And approve, in short, that the credit has only one owner.

Finally, the divorce agreement that may be reached may establish that one of the two credit holders is responsible for the repayment of the loan. This alternative is common when financing a good one that only one of the parties will enjoy. For example, the car.

However, even if this is in writing, the bank’s contract will still contain two holders. And, in case the responsible holder does not make the reimbursement effective, in the eyes of the bank there will still be two people to claim the debt.