During Separation, Who Pays the Bills?

During-Separation-Who-Pays-the-Bills-divorce-marriage-mortgage payment-divorce mortgage

A separation can be a confusing financial time. If you are still legally married but living apart, deciding who should pay the bills can be a difficult endeavor. Significant financial strain accompanies the attempt to maintain two separate households on the same income, but remember, the consequences for letting bills slide can be severe.

Below, you can find some practical answers to your top questions about paying the bills during separation:

Who is responsible for the payments?

In most cases, there is one clear-cut answer that makes it a little easier to divide up responsibilities. The spouse who has their name on the bill each month is usually the one who is ultimately responsible for issuing payment on a regular, timely basis.

In some scenarios, such as a mortgage payment, joint credit card account, or car loan, both spouses may have their name on the bill. When both spouses are listed as responsible parties to the debt, failure to pay those bills on time will result in credit damage to both parties.

You will need to consider the long-term ramifications of missing payments when you are financially responsible and able to pay. Even if you feel that it is your partner’s responsibility to cover that expense, you should still make sure that payment is issued for each and every bill. Otherwise, you could incur severe credit damage, which will make it difficult to qualify for future loans or mortgages.

Who should pay for what?

The decision about who is responsible for payments is largely a personal one, which is based on the unique factors of your marriage and divorce (including your finances, emotions, and ongoing relationship).

The spouse whose name is listed on the bill is usually responsible for that bill, but it the specifics of the marital home can get complicated. For example, one spouse may have their name on the mortgage, while the other continues to reside in the marital home. Household expenses can be shared, but they may not be equally split between spouses, depending on the income level of each partner.

If one spouse pays all of the mortgage and household expenses, even while maintaining their own separate residence, you may have significant financial repercussions before the divorce is finalized. This cost can add up to thousands of dollars, which is a major disadvantage to the responsible party.

Can you receive temporary spousal support?

It should be no secret that the incomes of two spouses are not always equal. If one person is a significantly higher earner than the other, the financially disadvantaged spouse may be able to request temporary spousal support while they try to figure out their newly single income. This support may also apply during situations when one spouse has been out of the workforce for an extended period of time.

Temporary spousal support is not likely to cover every penny of your expenses, but it can certainly be a welcome addition to your monthly income for a period of time. It can assist with paying bills while you search for a better job or a higher-paying position in your current field. The financial gaps can be substantially lessened, giving you breathing room and a better opportunity to establish financial security for your single lifestyle.

The additional benefit to this method of gaining assistance in paying your bills is that it does not have long-term consequences for your credit. The bills have a greater chance of being paid on-time with the financial assistance of your spouse, so it is more likely to make sure your credit score stays in pristine condition. As a result, you will be more eligible for future loans, mortgages, or credit cards.

Final thoughts

As you split your household into two separate residences, making decisions about who should pay for which bills is a stress-fueled time for every couple. Especially in situations where income was not equally divided between the two spouses, there can be serious financial strain from covering all of the new household expenses. Opting to ignore past-due bills will only create more headaches for your financial future by wreaking havoc on your credit score, including eligibility for future loans and programs.

Ultimately, the decision about who should pay the bills during a separation will be based upon the unique relationship of the couple, as well as their financial status. To make the best decision for both of you, consider what each spouse is able and willing to pay during this time.

Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrande Global, with offices in Dallas, New York and Hanover, New Hampshire.

 

Want more free divorce advice and tips?

Subscribe to the Divorce and Your Money Podcast, trusted by over 50,000 people across the United States.

 

Subscribe Here

Shawn Leamon, MBA, CDFA

Dallas, Texas

Shawn C. H. Leamon is Managing Partner of LaGrande Global, a firm that helps successful families manage large financial transitions like divorce, inheritance and selling a business.

He earned his Bachelor of Arts from Dartmouth College, double majoring in Economics and Philosophy, and his Masters in Business Administration at Spain’s IE Business School.

Before founding LaGrande Global, Shawn helped manage $1.1 billion in client assets at Bernstein Global Wealth Management. He also worked as a credit research analyst at J.P. Morgan. He is a Certified Divorce Financial Analyst, and he has been an advisor to numerous high-stakes divorce cases.

Shawn is the author of two well-received finance books: Managing Private Wealth: Principles, and Divorce and Your Money: The No-Nonsense Guide, both published in 2016.

In his spare time, Shawn is an ultra-endurance athlete and has competed in events as long as 24 hours. He is an Eagle Scout and a member of the Alumni Board of Greenhill School.