When we're a couple, it's not uncommon to take out a loan to finance certain projects. Whether it's a question of to buy a car, If you wanted to buy a house, furniture or finance any other needs you might have had with your ex-spouse, credit was the right solution at the time. Today, the situation is no longer the same! Are you wondering what will happen to your private credit after the divorce? Who will inherit the monthly payments? Is this possible? to redeem or repurchase to the lender? In this new article, find out how to proceed with your private credit after divorce.
When there is no joint and several liability
Determining which of the spouses will pay the remainder of the total loan amount comes down to questioning the terms of your loan contract. If there is no clearly stated joint and several liability (co-borrower), then the borrower is solely responsible for the private loan after the divorce!
Borrower solely responsible for private credit after divorce
In the event of divorce or separation, only the person who took out the private loan is liable. Which makes sense: the spouse has no role to play in the signing of the contract. After all, their name is not on the loan contract. So, even if you're married, your partner doesn't automatically have co-borrower status.
Your spouse has improved your solvency...
On the other hand, being in a couple improves your solvency if you want to take out a loan with a credit organization. In the case of a consumer loan, the lender will carry out what is known as a credit check. In this way, financial institutions judge the borrower's ability to repay the loan.
It goes without saying that having a working spouse increases your chances of convincing a bank to grant you a private loan. As a result, it's quite possible that your private credit application mentions your spouse's name, and that supporting documents concerning him or her had to be provided when you took out the loan. However, this does not make him or her a co-borrower, and therefore does not necessarily commit him or her to repaying the private credit after the divorce.
If the spouses are jointly and severally liable
In some cases, spouses can be co-borrowers on a credit contract. The only condition is that the loan contract clearly stipulates this!
Spouses are co-borrowers
If both your names appear as co-borrowers in the the loan contract, In other words, you'll both be jointly and severally liable for repaying your private credit after the divorce. In fact, many couples don't divorce because of the total cost of their joint debts.
A co-borrower may, however, with the agreement of his or her ex-spouse, request that he or she repay the private loan alone. However, the lending institution may refuse this request, depending on the future borrower's financial situation.
What about the matrimonial property regime?
So far, so simple! In principle, you are a single borrower and therefore only one person to repay the private loan after the divorce. If, on the other hand, you are a co-borrower, then two of you will repay the loan. At this stage, however, the information is not yet complete! Contrary to what you may read on some blogs, your marital status will also have an impact on the repayment of your private loan.
Participation aux acquêts and the regime of separation of property
In the vast majority of cases, you were married under the regime of participation in acquests. If this is also your case, our previous explanations apply and you can skip this paragraph. The same applies to people married under separation of property !
In the matrimonial regime of community of property, private credit after divorce can be divided as follows
Under community property regime, In the event of divorce, the spouses are jointly and severally liable for all debts incurred. This applies to both spouses until the day of divorce. This is known as the principle of joint and several liability. If this is your case, it is highly likely that the judge will decide to defer an equal share of your debt to your spouse. This distribution will most often take the form of a reduction in the marital benefit obtained by one or other of the parties. In other words, the credit will not be contractually divided by two, but you will have repaid an equal share of the debt based on the calculations made at the time of the liquidation of the matrimonial property regime.
Our conclusion on private credit after divorce
Unfortunately, divorce is often a painful ordeal for both parties. When financial problems are added to the equation, communication becomes very complicated! In this situation, the sayings «A well-informed man is worth two» or «You're always smarter afterwards» lend themselves particularly well to our various tips below.
A few tips to avoid complications...
Indeed, to avoid this type of complication, it's always best to plan for the worst before entering into a private credit agreement, and even before getting married! If things are clearly defined beforehand, complications can often be avoided later on.
In the case of taking out a private loan, it is always possible to set up parallel an acknowledgement of debt between the spouses. It is also possible to take out two smaller loans in each spouse's name. Instead of just one in the name of the same person.
Now that you know all the information about your private credit after divorce, take the time to ask our specialists for the best solution. You can always count on Lica to provide confidential support.