What happens to the loan after a separation?
Many couples take out a loan together, for example to finance a car or to buy new furniture. But what happens to this loan if there is a separation or divorce? That depends on who signed the loan agreement. If the signature of only one spouse is under the contract, only that spouse is obliged to repay the borrowed money. Even if a gain has been made in the marriage, the other spouse is exempt from repaying the loan after the separation.
If it is debts from an overdraft facility for the joint account, both spouses must ensure that the debts are settled even after a separation.
If the loan agreement was signed together
If both spouses have signed the contract, both are liable for the debts. One then speaks of joint and several liability. This means that the installment loan must still be used by at least one of the borrowers after the divorce. If the ex-partner stops paying, the bank can claim the debts from you.
This can only be changed if you have the loan rewritten. You can then have the credit agreement changed in consultation with the bank so that – even after the separation – only one spouse is obliged to repay the loan.
If you have taken out a joint loan for mortgage lending and both partners are owners in the land register, both will also be liable for the loan taken out after the separation – even if only one has signed the contract. However, with the consent of the bank, you can agree to release the debtor if you separate: one borrower takes over the other’s ownership. The prerequisite for the bank is that the new sole owner can continue to finance the loan after the divorce.
If a guarantee has been taken out
In the case of a loan with a guarantor, the guarantor is liable for the ex-partner’s debt even after a separation or divorce. If he no longer meets his payment obligation, the guarantor must continue to pay off the loan – regardless of whether this still happens in the marriage or after the separation. Here, too, it can only be agreed through a release from guilty liability that the guarantee is terminated in the event of a separation and that the guarantor can no longer be held liable for the payment obligations.