Unfortunately, there are a significant number of married and unmarried couples that decide to go their separate ways here in the UK. Separation and divorce could have been due to one or more reasons one of which could be that they have got into financially difficulty and built up a bad credit history with this putting pressure on their personal relationship. Whilst they have been living together it is quite likely that many couples will have opened a joint bank current account and a parting of the ways will almost certainly impact on both parties day to day banking arrangements.
What action may be taken?
This depends upon whether the separation is amicable or otherwise. Obviously it would be preferable that matters are dealt with amicably between both parties but, unfortunately, this is not always the case.
One or both parties should notify the bank that they have separated amicably. The bank may let them continue to operate the joint account until such time as decisions are made, for instance, as to who is going to be responsible for paying each of the regular household bills and sole accounts sorted out. If there is an overdraft facility on the joint current account then both parties will be joint and severally liable for any borrowing in that respect.
However, if the separation is not amicable, then the bank joint account mandate will need to be cancelled. The bank will stop the joint current account immediately so that either party cannot increase the indebtedness on the current account that both parties would be liable for by, for instance, withdrawing funds in cash that one of the parties claims belongs to them.
Applicable to both amicable and un-amicable separations
Both parties will probably either need to open sole current accounts with the same bank, another bank, building society or could even consider opening an account with a financial institution that specialises in offering current accounts for people with poor credit records. Alternatively, depending upon the situation, one partner may, with the bank’s permission, be able to have their name removed from a joint account and allow the remaining account holder to continue to operate the account and the person that has had their name removed from the account could open a sole account.
Any monies that were being paid into the joint account such as wages, salary, pension or benefits would need to be paid into the sole accounts of the beneficiaries and the companies making these payments notified of the new bank details. New direct debits and standing orders would need to be set up for regular future household bills such as the mortgage, rent, council tax and utility bills once both partners have decided how they are to be dealt with.
If the joint current account was operating in credit and is to be closed following separation or divorce then written authority could be provided by both parties to this effect with an instruction as to where the funds from the closed account are to be paid i.e. perhaps split 50/50 and paid into the sole bank current accounts of each ex-partner.