How are liabilities and debts treated by courts in divorce? =========================================================== [Ayesha Vardag](https://vardags.com/solicitors/ayesha-vardag) | Founder & President | 12th June 2025 **Who is liable for any debts upon divorce?** --------------------------------------------- In a divorce, the courts consider all debts acquired during the marriage (marital debts) to be shared by both spouses, regardless of whose name they are under. However, debts from before the marriage can also be marital debts if the finances were merged during the marriage. **If you're considering or going through a divorce with debts or liabilities involved, we can help. Click below for a free initial consultation with one of our expert divorce solicitors.** [BOOK FREE CONSULTATION](https://vardags.com/contact "BOOK FREE CONSULTATION") ### **Matrimonial debts** A matrimonial debt is one that both parties have benefitted from, regardless of whose name the debt is in. This could include, for example, a mortgage, loan for a holiday or a family car or home improvement. Although lenders normally deem the named spouse to be the one solely responsible for the debt, the court takes a different approach. ### **Individual debts** Individual debt benefits just one of the parties and the courts may, in certain circumstances (e.g. gambling debt), disregard these when determining how debts will be shared. The debt itself will have to be examined, and it may even be that a debt in both names is actually for the benefit of just one party. However, generally, the courts will often consider all debts to be matrimonial unless there are compelling reasons to decide otherwise. With that being said, individual debts such as student loans which were incurred prior to the marriage will usually not form part of the marital pot and instead the individual will be solely liable to pay. ### **Family loans** Family loans are common and can raise questions when parties approach a divorce. In trying to resolve financial matters associated with a divorce, it is common to encounter a situation where one party insists that money advanced to them by a parent, other relative, or friend has to be repaid to them and therefore this amount should be kept out of the matrimonial pot. The other party may argue against this, claiming that the monies were in fact a gift and therefore do not require repayment. In such circumstance, the court determines first whether the advancement of money should be considered a gift or a loan. Usually, where there is evidence of an intention to give, the money will be classified as a gift. In addition, if the money is classified as a loan, there is a further distinction needed to ascertain whether it is a 'soft' loan or 'hard' loan. The general guidance is as follows: #### **The following factors point towards a soft loan:** · Provided by a friend or family member with whom the borrower is on good terms · The lender is unlikely to want the borrower to suffer hardship · It is an informal arrangement and not in writing · No written demand for payment has been made (despite the due date having passed) and there has been a delay in enforcing the obligation #### **The following factors point towards a hard loan:** · Provided by a commercial lender such as a bank or loan provider · The terms of the obligation are arranged and feel like a normal commercial agreement · Penalties will be incurred / litigation if not repaid · There is no delay in enforcing the loan If the advancement of money is treated as a a 'soft' loan, the court may decide that it is not to be factored in as a liability on divorce. However, if the money transfer is treated as a 'hard' loan, it will be noted as a liability or debt that needs to be repaid. *Vardags' team of top divorce lawyers delivers a bespoke legal service to HNW and UHNW individuals, their families, and businesses.* About Us -------- Ayesha VardagFounder & President "A DIVORCE LAWYER WIDELY REGARDED AS ONE OF THE WORLD'S BEST" The Metro Vardags offer a unique approach to the law, specially tailored to the needs of HNW individuals. We offer City-quality representation for your divorce and family law needs. Our lawyers come from the very best universities and receive the very best training - they are determined, diligent, and dedicated to getting the best outcome... [read more](https://vardags.com/about-us) [BOOK FREE CONSULTATION](https://vardags.com/contact) Related Guides -------------- [How Are Assets and Liabilities Valued in Divorce?](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/how-are-assets-and-liabilities-valued "How Are Assets and Liabilities Valued in Divorce?") [How are different assets, incomes, and liabilities treated by the courts?](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/assets-income-liabilities-on-divorce "How are different assets, incomes, and liabilities treated by the courts?") [How are liabilities valued in divorce?](https://vardags.com/law-guide/how-the-courts-decide-a-financial-settlement/valuation-of-liabilities "How are liabilities valued in divorce?") The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you. AUTHOR ------ Ayesha Vardag "Britain's top divorce lawyer" Ayesha Vardag rose to fame for winning the landmark Supreme Court case of Radmacher v Granatino in 2010, changing the law to make prenuptial agreements legally enforceable in England and Wales. The founder and President of Vardags, Ayesha specialises in high-net-worth divorce, often with an international... [READ MORE](https://vardags.com/solicitors/london/ayesha-vardag "Ayesha Vardag") What our clients say -------------------- Knowledgeable, respectful and empathetic service and team. 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