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If romance goes wrong, so can your finances

One in six people have had a relationship break up around Valentine's Day, according to research by Nationwide.

Meanwhile, no-one wants to end up in court like Mr and Mrs Huhne.

So if next week's chocolates-and-red roses love-in should happen to end in tears, what happens to the joint finances?

In a UK-wide survey on joint loans for website Savvywoman.co.uk, 61% of people didn't know what would happen to their loan if they split up with their partner. Fewer than four in 10 knew that either partner is liable to pay the entire loan back, and the bank may pursue either for the full amount.

Sarah Pennells, the website's founder, says the first few weeks of the year are a common time for relationship breakdowns. "Unfortunately, when emotions are raw, dealing with joint finances can be incredibly difficult. When it comes to joint money, the starting point is that while your name is still on an account, you're liable for any debts on it."

She adds: "I'd like to see all banks give couples clear and concise information about their responsibilities for any debts on joint accounts. At the moment, some banks just cover this in their terms and conditions – which can run to many pages."

Martyn James at the Financial Ombudsman Service says: "The Ombudsman has continued to see increases in complaints from people experiencing money-related problems after relationships break down. In many cases, by the time the problem becomes apparent, it's too late to sort things out. So make sure you regularly check all the financial products you hold in your name – jointly or otherwise – as part of your regular financial routine."

A blog from Edinburgh legal and financial advisers Turcan Connell this week noted: "The fate of former Cabinet Minister Chris Huhne is a salutary lesson for spouses about the danger of marital secrets being later exposed by a husband or wife seeking retribution."

"For instance, a self-employed husband who ostensibly employs his wife, but makes her dividend payments in lieu of salary in order to reduce his own tax liability, risks having the arrangement exposed if it continues after separation.

"Often, however, the parties' interests will in fact continue to be inter-linked and it is not usually in a spouse's interests to damage the earning capacity of their ex, particularly if they are seeking to rely on them for future maintenance."

Nicola Jackson, a financial planner in the family office at Turcan Connell, says one person in a couple tends to run the finances. "It is then easy for one partner to abdicate responsibility to the other, then you find that they are holding all the cards potentially, and you are left in a vulnerable situation – you can't get credit, you don't know where the bills are, and your accounts get frozen."

She says a joint credit card is a danger, as both parties need to build their own financial credit history, and warns: "People can make bad financial decisions just to get out of the relationship. But if you have purchased a property together it is going to take time – we are not in the property boom." Recognising the need for professional help is a key step, Jackson says.

Divorce and separation is the fourth-largest cause of debt problems for debt charity StepChange, as it can trigger associated costs such as legal expenses and moving home.

In the case of joint debts, Ed Ware, a spokesman for StepChange, says: "Banks must show understanding to clients' circumstances, especially when the changing economic situation may leave them financially vulnerable."

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