Relationship breakdown — what you need to know

A longform article considering the various advice needs of a client who is seeking help after a relationship breakdown.

This article was originally published on 29 January 2020 and updated on 27 January 2022 and 18 May 2022.

A relationship breakdown can have a major impact on the client and their family. Your client may need advice about their rights in relation to the separation itself, their housing options, what benefits they might be able to claim and how to deal with any debts. This article uses one case study to introduce the issues and consider each of these advice areas in turn.

Case study — Bobby

Bobby is married and has two children aged 2 and 6. She and her husband have a joint tenancy of a 3-bedroomed privately rented property. It is an assured shorthold tenancy and they are 4 months into a 12 month fixed term.

Bobby has a joint bank account with her husband which is currently in overdraft. They have some joint debts with council tax arrears of around £2,000, water and electricity arrears and each have some credit card debts. Bobby is not working, she looks after the children and her husband works full-time. The couple receive tax credits and Bobby receives child benefit. They have no savings or other assets apart from the family car. Bobby and her husband are both British citizens living in the UK.

Bobby and her husband have decided to separate. She wants to know what her rights are.

Family

An adviser should consider the possibility of domestic abuse within a relationship. In this case study, there is no evidence of domestic abuse. Domestic abuse would impact the advice in many areas. This includes legal aid availability and occupation of the matrimonial home. It would also impact access to welfare benefits, debt management, and potential solutions were the victim a person subject to immigration control. Citizens Advice advisers can find further support in identifying domestic abuse via the ASK RE Programme. If appropriate safeguarding issues and policy must also be considered when dealing with vulnerable adults and children. You can read our further safeguarding guidance for advisers at Citizens Advice .

Does Bobby want to divorce?

One of the first issues to consider is whether Bobby is ready to proceed with a divorce. If there is to be a lengthy separation, she can make a formal written separation agreement with her husband. When preparing a separation agreement, advice should be sought from a family law solicitor.

The agreement can provide clarity about child arrangements or maintenance. It is unlikely to be enforceable in court on these issues should the agreement later break down. She could however rely on the separation agreement in divorce proceedings about other financial matters, for example what happens to the house. In the case of Radmacher (formerly Granatino) v Granatino [2010] UKSC 42, [2010] 2 FLR 1900 , the Supreme Court said terms of agreement must be “fair”.

If Bobby wants to divorce now, she can only do so if she has been married for at least a year.

On 6 April 2022 ‘no fault divorce’ was introduced in England and Wales by the The Divorce, Dissolution and Separation Act 2020. This means that Bobby will no longer have to attribute blame in her application, she simply has to make a statement that her marriage has irretrievably broken down. Bobby can apply for divorce via a sole application or she can now make a joint application with her husband. It is also possible to switch from a joint application to a sole application later in the process should that become necessary, if, for example, her husband no longer wishes to cooperate. You can find out more about the new process for divorce on Advisernet.

Bobby will not be entitled to legal aid for a divorce unless she can evidence that there has been domestic violence in the relationship. To start divorce proceedings in the Family Court, Bobby will have to pay a court fee of £593. If she has a low income or is in receipt of welfare benefits she may be able to claim a fee exemption via ‘help with fees’ (HWF) If she is making a joint application, both her and her husband will need to be financially eligible for HWF, so this may be a reason to make a sole application. Bobby can apply online for the divorce via GOV.UK.

The divorce process now takes a minimum of 26 weeks to become final (now known as the ‘final order’). Bobby should try to agree as much as possible with her husband to avoid delays and extra expense. Issues relating to the children and finances could take longer to resolve.

What will the arrangements be for the children?

Bobby will need to consider the ongoing arrangements for the children. Where are they going to live and what should the contact arrangements be? As a result of the marriage, both parents will have parental responsibility for the children under the Children Act 1989 (“CA 1989”). They have all the rights, duties and responsibilities that by law a parent has in relation to their child. These rights exist for the benefit of the child not the parent. The welfare of the child will be the court’s paramount consideration (s.1(1) CA 1989).

If possible, the parents should try to agree the ongoing care of the children. Otherwise the family courts will decide. The parties should consider mediation if they are in difficulty reaching an agreement.

If not agreed, Bobby can make an application to the court under the Children Act s.8 for a Child Arrangements order. She will have to try mediation by attending an introductory meeting, known as a Mediation Information and Assessment Meeting (MIAM). If she can show an exception applies she will not need to attend (see below). CAFCASS is the Children and Family Court Advisory and Support Service. They will contact the parties at an early stage to help resolve the issues. The court can direct when and with whom a child should live, spend time, or have contact. Bobby is not working and is caring for the children. Her husband works full time. It is likely that the children would continue to live with Bobby, however the court could order regular contact including overnight contact with her husband. If there are welfare concerns this will have an impact on the court’s decision. Legal aid will not be available for this application unless there has been domestic violence.

Could mediation help?

Mediation is often a cost effective way for separating couples to reach an agreement. This can be about all issues including the divorce, the children and the finances. Advisers can help Bobby find a local mediator via the Family Mediation Council. Legal aid is likely to be available for Bobby to attend mediation. It will also cover her husband’s mediation costs for the introductory meeting and the first mediation session. The government has also introduced a time limited voucher scheme which provides a contribution of up to £500 towards mediation costs of cases involving children which Bobby or her husband could apply for.

The Family Procedure Rules (FPR) 2010 Pt 3 require the parties to attend a MIAM before commencing an application to the family court in respect of children or finances. This does not apply if there are exceptional circumstances as set out in FPR 3.8 , for example there has been domestic abuse.Advisers can find further information about mediation on Advisernet.

What about child maintenance?

Bobby will need advice on her entitlement to child maintenance. Child maintenance is not usually dealt with by the family court. The Child Maintenance Service (CMS) determine this. Bobby should try to reach an agreement with her husband first but she can use the child maintenance calculator on GOV.UK for guidance as to her entitlement (see Debt and Money section for further information).

What are the financial consequences?

The financial consequences of a relationship breakdown must be considered. Mediation can be particularly effective concerning these issues. Remember an attendance at a MIAM is required prior to a court application unless exceptions apply.

Both parties have an obligation to each other, to the Mediation process, and to the Court, to provide a full and frank disclosure of their financial affairs. If they do not, the Court may overturn an agreement/order for that reason. The Family Court can make a variety of divorce financial orders under Part II of the Matrimonial Causes Act 1973 (MCA) as follows:

• Property Adjustment Order;
• Lump Sum Order;
• Periodical Payments Order;
• Secured Provision Order;
• Lump Sum Order for any children;
• Periodical Payments Order for any children (if made by agreement);
• Secured Periodical Payments Order for any children (if made by agreement); and
• Pension Sharing or Attachment Order.

The Court has to consider a clean break; that is a dismissal of future claims for maintenance or financial ties between husband and wife. This does not extend to maintenance for any children. When deciding how to deal with the finances the court will consider the factors set out at s.25 MCA . The first consideration will be the welfare of any children. Individual ownership of assets has less importance. All assets owned by either party will generally be considered matrimonial assets to which each party has a claim. The court can distribute these assets to try to balance the needs and resources of the parties. This may mean there has to be a departure from an equal sharing of the assets.

In Bobby’s case there are limited capital assets, as the home is rented. There is an overdraft on the joint account and they have some joint debts. The only asset appears to be the car. Note that this may be subject to finance and will have associated running costs. Who retains that asset will depend upon needs, for example does the husband require it for work, or does Bobby need it to transport the children? If it were retained by the husband there would be an argument that Bobby should receive a lump sum payment in respect of her interest. The implications of this upon her benefits entitlement will need to be considered.

With regard to the joint debts, it is not possible for the court to order one party to take responsibility for payment to a third party creditor. It may be possible to reach an agreement either directly between the parties or via mediation. This could be that one party be responsible for a debt liability. A financial consent order can incorporate an agreement for that party to indemnify the other for the debt. This would then be legally binding upon the parties. The husband is likely to have a higher income and earning capacity than the wife and a case may be made for spousal maintenance. There would be consideration of the parties income and outgoings. An agreement for the payment of the debt liabilities in lieu of maintenance could be reached. Should the husband not agree, the court can make an order for periodical payments from him to the wife. Bobby could then use this towards the liabilities. If Bobby moves from child tax credits to universal credit, formal spousal maintenance will reduce UC received pound for pound. Advisers should consider whether Bobby is then likely to improve her position via this route.

The housing position is considered in more detail below. It should be noted that a transfer of the tenancy is one of the property adjustment orders that the court can make under MCA 1973. There are also other available applications to deal with a transfer eg s.53 Sch 7 Family Law 1976, Sch 1 Children Act 1989. Whichever route is taken the proceedings should be heard together within the family proceedings.

Finally, an often overlooked financial consequence of divorce is loss of pension rights. Under s.25B-25D MCA the court can divide pensions between the parties by way of a Pension Sharing or Pension Attachment order. If Bobby’s husband is working full time it is possible that he has some pension provision. Bobby is likely to have an entitlement to a share of this particularly if she has no pension herself. How a pension should be divided depends upon its value, the age of the parties, the length of the marriage as well as the usual s.25 MCA factors. Read more information on pension sharing on Advisernet.

If Bobby does seek a share of her husband’s pension this will have to be incorporated within a court order. Even if financial matters are agreed it is preferable in any event to have them confirmed by the court within an order. This will ensure the agreement is properly recorded. It will be enforceable should either party seek to depart from what has been agreed in the future. Depending upon the terms, it can also record a clean break between the parties. This will ensure certainty, and prevent further claims relating to the marriage should either party’s financial position later change. An order can also prevent a claim from a former spouse upon death of the other under the Inheritance (Provision for Family and Dependants) Act 1975.

Any financial order will not be effective until the final divorce order. With that in mind, clients should always be advised to consider whether they need to make a will on separation. Whilst still married, Bobby’s husband would be the main beneficiary of her estate. This would be under the rules of intestacy if she does not have an existing will. Any nominations made for benefits under pension schemes may need review pending resolution of the divorce. In Bobby’s case the assets are limited and she may feel this is not necessary.

Amanda Worger is the senior family law expert in the Expert Advice Team at Citizens Advice

Housing

There are three initial questions that you need to consider when advising a client on their housing options following a relationship breakdown. Their options will depend on whether:

• the property is owned or rented
• it is in joint names or in the sole name of one person
• they are married/civil partners or cohabitees

See Advisernet for further information.

In Bobby’s case, once it is established that the property is rented, it is important to check whether there is a fixed term or a periodic tenancy.

Immediate rights to remain in the property

Bobby is a joint tenant of an assured shorthold tenancy. Under housing law, as joint tenants, both she and her husband are entitled to live in the property. Each is not entitled to exclude the other person from the property unless there is a court order. If Bobby was not a joint tenant and had no right under housing law to remain she would still have rights to occupy and not to be excluded under s.30 of the Family Law Act 1996.

Furthermore, the tenancy status lawfully continues by the presence of at least one joint tenant remaining at the accommodation so it doesn’t matter if one of them simply leaves — the tenancy will still exist.

Payment of rent

Bobby and her husband are ‘joint and severally’ liable for payment of the whole rent. The landlord can pursue each of them for the whole rent. Even if one tenant leaves the property s/he will still be jointly and severally liable for all rent arrears and other charges while the joint tenancy exists.

However within any divorce negotiations Bobby might be able to argue that her husband should either pay all of the rent or contribute if he has a much higher income (as above) — she could also agree this as part of any separation agreement. This family law option doesn’t mean that Bobby isn’t still liable for the rent under the tenancy but it needs to be considered, and in practice might provide another way to ensure the rent is paid.

If Bobby cannot afford the rent she can consider applying for benefits to assist her to pay it (see benefits section below for more details) and look into whether she can get any child maintenance (see debt and money section below for more details).

It is really important to take steps to deal with affordability and to make the necessary benefits and child maintenance claims, because there is ultimately a risk of eviction should arrears accrue. It will also help Bobby, if she is seeking to negotiate with her landlord to either grant her a new tenancy in her sole name or have the joint tenancy assigned to her, if she can show she can afford the ongoing rent.

In reality, whilst liability remains joint and several, the implications of not paying the rent, i.e. risk of eviction, are far more severe for the person remaining in the property than one who has moved out. Where a departed tenant refuses to make any contribution towards the rent, it would be advisable for the remaining tenant to pay the rent if they can afford to do so (at least in the short-term). This will reduce the risk of eviction whilst longer term options regarding the property and any contributions are pursued.

Immediate options to exclude her husband from the property and/or regain entry if she has been denied access

Using family law Bobby might be able to apply for an occupation order under s.33 of the Family Law Act 1996. She is classed as an ‘entitled person’ as she has rights under housing law (as a joint tenant) to reside in the property. (She is also an ‘entitled person’ because she has matrimonial homes rights to the property).

She could also apply to the court for an occupation order if she has been excluded and needs to regain entry to the property or if she wants to exclude her husband from the property.

It should be noted that excluding someone from their home is an extreme option and the court will only usually make an order where there are no other real options available.

If there was domestic abuse the court is more likely to grant such an order. Further, if there was domestic abuse involved Bobby might also want to consider the option of applying for a non-molestation order. You can read more about occupation orders and non-molestation orders on Advisernet.

Longer term options to remain in the property

Bobby’s current tenancy is an assured shorthold tenancy and she is still within the fixed term (she is 4 months into a 12 month fixed term). If she wants to remain in the home longer term she needs to consider her options.

Most clients will prefer to have a tenancy in their sole name, so that they can stop their ex-partner returning to the property and be confident that he or she can’t unilaterally end the tenancy for both of them.

The type of tenancy a client has is also a practical consideration when deciding what to do about their tenancy — some tenancies give more protection than others. This is particularly important when deciding whether it is worth taking court action given the costs, time and stress that this could cause. For Bobby, she has an assured shorthold tenancy which, once the fixed term has expired, does not offer her a significant amount of security as she can be evicted by a no-fault s.21 notice. She will need to bear this in mind when deciding what to do.

It’s a common misconception that a landlord can simply ‘take a joint tenant’s name off’ the tenancy. Normally this outcome can only be achieved by:

• Assignment of the tenancy from joint names to one sole name (note — this would not be possible if Bobby and her husband were joint secure tenants of council housing — see Burton v Camden LBC (2000) 17 Feb HL)
• End the current tenancy (via a surrender or by notice to quit, if possible) and agreed with the landlord to re-grant the tenancy to one sole name
• Applying to court for an order to transfer the tenancy to one sole name

It’s also important to note that where the parties are married or are civil partners, even if steps are taken to get the tenancy placed into one sole name, the spouse or partner who has left the property will still retain home rights (under s.30 Family Law Act 1996) which would allow them to return to occupy the former matrimonial home until the marriage or civil partnership has ended (unless the court orders otherwise).

Assignment

The rules on assignment depend on what type of tenancy your client has. Bobby is in an assured shorthold tenancy which is still within the fixed term. She will only be able to get the tenancy assigned to her if her tenancy allows this. If she had moved beyond the fixed term into a periodic assured shorthold tenancy different rules apply — there is further information on Advisernet about the options for periodic assured shorthold tenants. Furthermore if she had entered into a different type of tenancy, such as an assured, secure or protected tenancy, rights of assignment would be different. You should check the rules that apply to the client’s particular housing status — there is further information on Advisernet about the rules on assignment for assured and assured shorthold tenants, secure tenants and protected tenants.

In this case, Bobby will need to check her tenancy agreement to see if it allows her husband to assign the tenancy to her. If it does she could speak to her husband to see if he will agree to do this. She also needs to read the terms of the tenancy carefully to see if she needs to get her landlord’s consent to assign, and then consider approaching the landlord to get that consent. She’ll need to think about how she does this. It will help if she can show that she can afford the rent based on her own income. There is a risk that the landlord will refuse consent if they don’t think that Bobby can afford the rent on her own. It’s important that if an agreement is reached to assign the tenancy that this is made by deed which must be in writing, signed ‘as a deed’ and witnessed.

Ending current tenancy and re-grant

As Bobby has a fixed term tenancy neither she nor her husband can just end the tenancy by serving a notice to quit at this time. If they do so it simply won’t be effective. However once the fixed term ends, if they remain under a statutory or contractual periodic tenancy and one of the joint tenants serves a valid notice to quit, the joint tenancy ends for both tenants when that notice expires (Hammersmith and Fulham LBC v Monk [1991] UKHL 6.)

For more information on notice requirements read further detail in our Adviser Online article ‘Joint tenancies and fixed terms: notice to quit’.

If Bobby wants to end the tenancy now another option will be to try to end the tenancy by surrender. For a surrender to be effective the agreement of all parties is required (i.e. Bobby, her landlord and her husband). If Bobby’s husband and/or landlord won’t agree she won’t be able to surrender the tenancy.

If there is a break clause in the tenancy which says explicitly that it can be exercised by one of the joint tenants then it might be possible for her to end the tenancy that way, although this is untested in the law. The normal rule is that break clauses can only be exercised where all joint tenants agree.

If Bobby is able to end the tenancy by surrender or by exercising a break clause (if that is possible) then it’s important that she gets the landlord’s agreement that she will be re-granted a tenancy in her sole name before she takes steps to end the original tenancy. The landlord is under no obligation to agree so any agreement should be confirmed in writing.

Transfer of tenancy

The joint tenancy can be transferred to one of the spouses under the Matrimonial Causes Act 1973, Family Law Act 1996 or Children Act 1989. An application for such a transfer should be made within the family proceedings. As stated above, Bobby will need to consider whether it is actually worth taking court action given that she has an assured shorthold tenancy which could be ended fairly easily once her fixed term ends.

The factors that the court needs to take into account in determining whether to order a transfer of tenancy depend on the legal basis of the application. They are set out in s.25 of Matrimonial Causes Act 1973, para 5 of Schedule 7 of Family Law Act 1996 and s.15 and para 4(1) of Schedule 1 of Children Act 1989 respectively.

It should also be noted that if the transfer is made under the Family Law Act 1996 the court can order compensation to be paid to the spouse or civil partner losing the benefit of their home.

For an application for a transfer of the tenancy the client may need the assistance of a solicitor. Such an application to the court is usually outside of the scope of legal aid unless there is domestic abuse involved.

If Bobby does want to take court action she’ll need to make sure that the tenancy still exists by the time she comes to apply to the court for a transfer. As she has a fixed term tenancy her husband can’t serve notice to quit to end the tenancy for both of them at this time. Once it becomes periodic, he could do this and there would be nothing for the court to transfer by the time that she had made an application to court (see Derwent Housing Association Limited v Taylor, Court of Appeal (Civ Div) 19 January 2016)). Once one joint tenant has served a valid notice to quit, it cannot be set aside by the court (Newton Housing Trust v Alsulaimen [1999] 1 AC 313).

If there was the risk of a notice to quit being served on Bobby by her husband she could seek an undertaking from him not to issue the notice until the matrimonial claim is dealt with.

If he refuses to give such an undertaking, it is possible to make an application for an injunction to prevent him serving a notice (using the court’s inherent jurisdiction under Family Procedure Rules 2010 r 8.34 and r 20.2.) However, such an injunction or undertaking could be of limited use because if it is breached, the person serving the notice can be held in contempt of court but the notice itself is still a valid notice — Harrow LBC v Johnstone [1997] 1 All ER 929 HL.

Staying as joint tenants

It’s also important to note that it’s not always possible or preferable to get the tenancy into the sole name of the partner who has remained. Where this is the case there is nothing in law that prevents one partner just moving out and taking no steps to end or transfer the tenancy and they would simply remain as joint tenants. However this comes with risks for the departed joint tenant. The main consideration is that they will continue to be liable for the ongoing obligations and liabilities arising under the tenancy agreement (most commonly any current and future rent arrears). This could result in them being:

• pursued for any arrears as a debt in the normal way
• excluded or suspended from bidding on the housing register for having housing-related arrears (local policy depending)
• being found ‘not homeless’ if they later apply to the local authority under Part 7 Housing Act 1996 if the property subject to the joint tenancy is ‘reasonable to continue to occupy’.

If Bobby doesn’t want to stay

Not all clients will want to stay in the property after a relationship breakdown — this could be because they want to make a clean break or the steps involved in remaining in the home are too difficult for them (for example, the cost and stress involved in court action). The other particularly relevant consideration is where the client’s tenancy does not provide them with much long term security, such as an assured shorthold tenancy, as opposed to a secure or assured tenancy with the council or a housing association.

If Bobby doesn’t want to remain in the property longer term advisers will need to consider the other options available to her, including looking for re-housing. It is important to consider whether her current tenancy can be ended if she does find alternative accommodation, for example, is she tied into a fixed term and also the risk that if she gives up a suitable property she could be found ‘intentionally homeless’ if she later applies to the local authority under Part 7 of the Housing Act 1996 as homeless.

Rachael Gore is a senior housing expert in the Expert Advice Team at Citizens Advice

Welfare Benefits

Relationship breakdown can lead to a need for benefits advice. The issues to consider are:

1. Are there any current benefit claims that will be affected by the breakup?

2. Will either member of the couple need to make a new benefit claim following the relationship breakdown?

3. Is anyone in the family missing out on any benefit entitlement?

Current benefits affected by the breakup

Bobby needs to contact tax credits to inform them of her change of circumstances. This is because her claim for tax credits is a joint claim and this will now come to an end. She needs to do this as soon as possible or she may be getting an overpayment of tax credits which will be recoverable. As she is continuing to be the main carer for the children the claim for child benefit can continue.

New claims for benefit

As Bobby’s tax credit claim is going to come to an end, she will need to make a new claim for benefits as she doesn’t have any other income, except for child benefit. Due to the introduction of Universal Credit (UC) she will not be able to make a new claim for tax credits and she will have to claim UC. She needs to make a new claim for UC as soon as possible as there are limited provisions to backdate UC. There is a five week wait for a first UC payment, so she should also apply for an advance payment when she makes her claim. As she is going to be the children’s main carer she will be able to claim two child elements in her UC claim. As she doesn’t have any earnings she will be entitled to free prescriptions and free dental treatment if she claims UC. If she receives any payment of child maintenance this will be disregarded as income for UC. Any maintenance paid for Bobby would count as income for UC.

Advice about Universal Credit

Bobby will need some advice about the implications of claiming UC as maintaining a UC claim is different from claiming tax credits. UC is assessed on a monthly rather than an annual basis. In order to claim UC a claimant has to sign a claimant commitment. This often involves work related activities. As Bobby has a child under three, her work-related activity for UC is restricted to attending a work focused interview and making preparations for work. When Bobby’s youngest child is three she will be subject to all work requirements. This will mean that she will have to look for and be available for work. The work should be compatible with her caring requirements. Bobby may wish for some information on how it will affect her financially if she finds a job. Under UC, if she works, 85% of child care costs are payable (in arrears). There is also work allowance included in the UC calculation for claimants with dependent children. She might need help to do a better-off calculation.

Benefits to help with her housing costs

To continue to afford to pay her rent Bobby will need to obtain financial help with her housing costs. As most working age claimants can no longer make a new claim for housing benefit Bobby will need to claim help with her housing costs through UC.

As Bobby is a joint tenant UC may deem her to be responsible for only 50% of the housing costs. This would reduce the amount payable to her by 50%. UC can apportion rental liability in a different way if it is more appropriate to the circumstances (see schedule 4, para 24(5) UC regs 2013 and Adviser online article).

If UC make a decision to pay only 50% of the housing costs Bobby should ask for a mandatory reconsideration of this decision on the basis of the above. If the mandatory reconsideration is not successful she should appeal the decision. In the meantime, Bobby could apply for discretionary housing payments from her local authority to cover the shortfall in her rent.

Even if 100% of her eligible housing costs is included in the UC calculation, as her home has 3 bedrooms, there will be a size-related reduction as her children will be expected to share a bedroom. Local housing allowance rates, which are used to calculate the amount of UC housing costs, are lower than most market rents. This means that the UC housing costs element is unlikely to cover her full rental liability. Bobby will need information about this, so that she can budget for her rental payments.

Benefits to help with council tax

Bobby should inform council tax that she is the only adult living in her home. This will lead to a 25% reduction in her council tax bill. She should also claim council tax rebate from her local authority for a further means-tested reduction. Whether she has to pay a contribution to her council tax will depend on the details of her local authority’s council tax scheme.

Benefit check to maximise income

A full benefits check will identify if Bobby has any further benefit entitlement. If Bobby has health issues she might be able to submit a medical certificate and claim UC on sickness grounds, or she might be able to put in a claim for personal independence payment (PIP) if she has a long term disability. If Bobby is providing care for a disabled person she might be able to receive the carers element in UC. If either of the children have a disability Bobby might be able to claim disability living allowance for them. If there is entitlement to any of these benefits it would help the family to manage financially.

Rachel Ingleby is a welfare benefits expert in the Expert Advice Team at Citizens Advice

Debt and money

Following a relationship breakdown it will be important to advise the client to take steps to separate her finances, establish who is liable for any debts of the relationship and try to stop any further joint debts accruing.

Banking

Bobby and her husband have a Joint bank account. If things are amicable they can agree to close the joint bank account, but if not then Bobby needs to contact the bank as soon as possible and ask for a stop to be put on the account. Bobby will then need to open a new bank account to have her benefits and or wages paid into it. A basic bank account may be her only option in view of her debts. She will need to contact the child benefit office to ask for this to be paid into her new account.

Maximising income

Bobby will need to make a claim for Universal Credit (UC) as soon as possible — see the welfare benefits section for further details of how to claim UC.

As she is living in a three bedroom property she will be subject to a size-related reduction on her housing cost element and so she might need to claim a discretionary housing payment — see the welfare benefit section for more details on help with housing costs.

One option for Bobby would be to get a lodger but this could impact her tenancy and other benefits. You can find further information on the impact of taking a lodger here.

Bobby can claim free school meals for her 6 year old if s/he stays with her. She should also check to see if her local education authority might help with some other school costs, for example learning a musical instrument.

If the children stay with her or there is a shared care arrangement , Bobby can contact Child Maintenance Options to discuss her entitlement to child maintenance. If she knows her husband’s earnings Bobby can find out how much child maintenance she can expect by using the online calculator. If care is shared between them the amount payable to her might be reduced to take this into account.

If her husband has moved in with a new partner and that person has children this will affect the amount that Bobby can expect him to pay under the statutory scheme. If things are amicable with her ex she could try reaching a family based arrangement as this does not involve any fees. However if payments agreed under a family based arrangement are not paid then this voluntary agreement is not enforceable.

If they cannot agree a family based arrangement or if he fails to pay what was agreed Bobby can choose to pay a one off £20 fee to apply to the child maintenance service (CMS) for a child maintenance assessment to be made (the £20 fee can be waived if there has been domestic violence). The advantage of this is that once an application has been made to the statutory scheme the child maintenance payments will be enforceable. Once an assessment has been made Bobby can ask her husband to set up direct payments to her but if he won’t agree to pay her directly she can apply to use the CMS collection service. Fees are payable from both parents for the collection service (20% from the paying parent and 4% from the receiving parent).

Priority debts

Bobby’s council tax and electricity arrears are both priority debts and so must be dealt with first.

Council tax arrears

Bobby and her husband are jointly and severally liable for the council tax arrears. You will need to check what stage of recovery this is at. Bobby should contact the council to explain that she and her husband have separated and ask for any recovery action to be put on hold. If bailiffs have already been instructed, ask the council to take the account back from the bailiff — Bobby is currently ‘vulnerable’ as she is now a single parent and has undergone a recent separation. If the council refuse to take the account back from the bailiffs Bobby can make a complaint. It will be helpful to find out whether Bobby’s local council has signed up to the Council tax protocol.

Bobby can claim a single person’s discount as soon as her husband leaves and she may also be entitled to council tax reduction to reduce her ongoing bill. A payment arrangement will need to be made for the arrears, possibly by deduction from universal credit (but see debt solutions below). Since Bobby and her husband are jointly and severally liable, if he does not pay, liability for the full amount of the arrears will fall to Bobby. If Bobby has a deficit budget she can ask for a discretionary council tax reduction under section 13A of the Local Government Finance Act. See our article Discretionary Council Tax reduction: How to guide for further details and a template letter. Bobby will need to contact her local council in writing to ask for this and send them a copy of her financial statement. She’ll need to claim any benefits and discounts that she might be entitled to first.

Electricity arrears

Start by checking who signed the contract for the electricity supply. If, when Bobby and her husband moved in, they did nothing to change suppliers then they are likely to be jointly and severally liable under a ‘deemed contract’. However, if they moved in and her husband signed a new contract for supply, he might be liable and not Bobby.

If Bobby is liable, it will be helpful if you can contact the supplier on Bobby’s behalf and ask for any recovery action to be put on hold. Once benefits have been claimed Bobby might be able to offer a direct deduction or choose a weekly/monthly payment plan (or see debt solutions below).

If the supplier insists on installing a prepayment meter Bobby can challenge this if she can show that:

• illness or disability means that she and her children would be at significant risk if the supply was disconnected (that is in the case of self-disconnection)
• she cannot access the meter or top it up (but the supplier can relocate the meter if feasible or enable online top-ups)
• she’ll qualify for third-party deductions from benefits (i.e. electricity payments go directly to the supplier)
• there is a genuine dispute over arrears owed
• the supplier hasn’t attempted to negotiate with her, or looked at other suitable options.

Bobby should enquire about a warm home discount which will reduce her bill by £140 if she qualifies. She might be able to get charitable help to clear this debt from an energy fund or other grant giving charity — check Auriga grants or Turn2us.

Dealing with non priority debts

The bank overdraft, credit cards and water rates are all non priority debts.

Bank overdraft

Bobby and her husband are jointly and severally liable for this. A holding letter should be sent and the bank asked to freeze interest and charges. Bobby needs to act quickly to ask for a freeze on the joint account if she suspects that her husband will run up further debt.

Credit cards

Bobby is only liable for any cards in her own name. If she has a 2nd card on any of her husband’s accounts she will not be liable for repaying the balance on these. If her husband has a 2nd card on any of her accounts she needs to contact the credit card company urgently to get a stop put on the card. A holding letter should be sent to the credit card companies.

The bank and credit card companies are required to act reasonably and treat Bobby fairly. Specifically under CONC 7.3.12R they should suspend action for 30 days.

Water charges

Even if the bill is in her husband’s name, as a joint householder she will be liable for paying this. The water company should be contacted and a payment arrangement made, since although this is a non priority debt (they do not have the power to disconnect) she will want to stop them from getting a judgment and transferring this to the high court for enforcement.

Potential debt solutions

If Bobby is not able to reach an agreement with her husband for payment of the debts and make a legally enforceable consent order within the divorce (see family section above) she will need to consider other potential solutions. Once she has stabilised her income and her housing situation she will be able to draw up a budget and work out if she has any surplus income to pay her debts.

DRO

If Bobby’s total debts add up to no more than £30,000, any car that she owns is worth less than £2000, other savings or assets are worth no more than £2,000 and she has no more than £75 per month surplus income, she can apply for a DRO. This will cost £90, she can pay by installments or might be able to get help from a charitable trust for the fee.

All of Bobby’s known debts would be covered by a DRO and she will be released from liability for them after 12 months, as long as her situation has not improved in that time. The DRO in Bobby’s name will not release her husband from any of the debts where there is joint liability, so he will be left with sole responsibility for these.

To include the water charges in the DRO she will need a bill in her name. If Bobby has given away any property or paid one creditor in preference to another within two years of a DRO application the application might be declined.

You will need to advise Bobby that a DRO in her name will appear on a public insolvency register and could have a lasting impact on her credit rating. Also during the 12 month term of the order she won’t be able to borrow £500 or more without telling the lender that she has a DRO. If she runs a business she can’t act as a company director or trade in a name other than the one that she had at the time that the order was made. Bobby should be told that if she gets a DRO she will have a duty to tell the insolvency service if her income goes up or she receives any property during the 12 months of the order, and if this is the case the DRO could be revoked.

Bobby will need to find an approved intermediary to help her with a DRO application.

Bankruptcy

If Bobby does not qualify for a DRO or a DRO is not suitable, for example because of unknown debts, bankruptcy is an option. She can apply for bankruptcy herself by completing the online application but ought to get advice first about all the implications of bankruptcy. Bankruptcy will cover all of her debts — known and unknown and she will be released from liability from them after 12 months. As with a DRO the bankruptcy order will only cover Bobby’s debts and her husband will be left responsible for any joint debts.

A bankruptcy application will cost £680 but she might get help from a charitable trust. You will need to advise Bobby that, as for a DRO, a bankruptcy order in her name would appear on a public insolvency register and is likely to have a lasting impact on her credit rating. Also during the 12 month term of the order she won’t be able to borrow £500 or more without telling the lender that she is bankrupt.

If she runs a business she can’t act as a company director or trade in a name other than the one that she had at the time that the order is made. If she remains on benefits she won’t be expected to make any payments from her income into the bankruptcy but if she starts getting maintenance or finds a job within 12 months of the bankruptcy order and is assessed as having surplus income she will need to pay into the bankruptcy for three years.

Individual Voluntary Arrangement (IVA)

If Bobby has higher surplus income and or a lump sum to offer (she might have sold an asset or family might have stepped into help) then she could opt for an IVA.

This would usually last for 5 years and would cost several thousand pounds but the fees/charges are not payable up front. If she managed to get through to the end of the IVA term she would be released from any unpaid balance.

Administration order (AO)

If Bobby owes no more than £5,000 in total and already has a county court judgment in her name she could apply for an AO. There is no upfront fee. She would need to make an offer to pay a small amount each month and this can be limited to 3 years after which her liability for the balance will be written off.

If there has been domestic abuse or there is a threat of domestic violence and Bobby has had to move in order to stay safe, she can apply for a court order to prevent her new address from appearing on the public insolvency register if she wants to apply for either bankruptcy, a DRO or an IVA. See our December Debt Update for how to apply for a person at risk of violence order.

Other options

If Bobby doesn’t want to opt for a formal insolvency option she might consider a debt management plan (DMP) once her situation improves but will need more than £50 per month surplus after meeting all her essential expenditure and allowing an amount for priority debt repayments. With a DMP Bobby could end up repaying for many years depending on her debt total.

Breathing Space

The statutory Breathing Space scheme might be useful for Bobby to allow her time to consider all her options. A breathing space will give Bobby 60 days to sort out her income and take stock. During this time her creditors will not be able to take any action and must freeze interest and charges. For further information on Breathing Space see our article Breathing Space — a guide for advisers.

Lorraine Charlton is a debt expert in the Expert Advice Team at Citizens Advice

Immigration

In this case study Bobby and her husband are both British citizens, however if this was not the case it would be important to check:

• If Bobby is not a British or Irish citizen and she holds a family visa on the basis of her marriage to a British citizen or someone with indefinite leave to remain in the UK then this will change on separation or divorce. She will need to inform the Home Office and should seek specialist immigration advice as her right to stay in the UK on this basis will be terminated. There may be another visa she can apply for in order to stay in the UK. Once Bobby has indefinite leave to remain, separation or divorce will not affect her status.
• If Bobby is in the UK on a partner visa and was a victim of domestic abuse she may be able to apply for indefinite leave to remain and access to public funds. Legal aid may be available.
• If Bobby is not a British or Irish citizen and has pre-settled status under the EU Settlement Scheme (EUSS) on the basis of her marriage to an EEA citizen then her right to stay on this basis will only change on divorce, not just separation. She may be able to retain her right of residence even after divorce in certain circumstances and apply to the EU Settlement Scheme in her own right or have a right to reside on the basis of caring for a child. If Bobby has EUSS settled status then this no longer depends on her marriage and will not be affected by her divorce.
• If either Bobby or her husband are subject to immigration control then their eligibility for benefits needs to be checked and will depend on their status and right to reside.
• If either Bobby or her husband are subject to immigration control then their right to reside will also need to be checked if they want to apply for social housing and their right to rent should be checked if they are to remain or move into private rented housing.

Djamilla Hitchins is an immigration expert in the Expert Advice Team at Citizens Advice

The information in this article is correct as of 18 May 2022.

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