Dealing with debt and divorce

Publication date | 03/07/2009

Divorces are expected to increase this year because of couples rowing about money, it has been said.

A third of current inquiries to lawyers from those wanting to end their marriage are linked to the recession, Kensington Financial Management Consultants claimed.

With the average marriage lasting 11.5 years, couples could find that they have not had chance to clear their debt before they split up.

Couples getting married spend an average of £20,000 on their big day. However, with the length of a marriage in decline, many divorcing Britons are faced with outstanding debt balances that run into the thousands, the financial firm stated.

Stuart Parkin, managing director of Kensington Financial Management Consultants, said: "By cutting back where you can you will be glad of it down the line, especially when children come in to the equation."

He pointed to the fact that couples borrow an average £26,000 - including interest payments - to cover the cost of their big day. However, they may still be paying for this if they decide to get divorced.

Britons who are heading to the divorce courts may not only be concerned about legal fees, but also how to address outstanding debt from a marriage.

Couples may have considered selling an underperforming endowment policy in order to raise the cash to help clear debt, which may allow both parties to have a fresh financial start.

A spokesperson for aap, the UK's biggest buyer of endowment policies, said that some of its customers had sold - rather than surrendered - their unwanted policy in order to obtain the money required for big family changes, which may include a divorce.

Furthermore, if aap decides to make an offer on an endowment, it will always pay out more than what people would have received through surrendering their policy, he added.

Over 60 per cent of individuals recently told LV= that the credit crunch has made them think twice about attending a wedding because of the expense of doing so.

Despite the recession, over the last 18 months, 2.8 million people have attended a wedding abroad.