31 March 2016
Separating or divorcing? What that means for your loans.
What happens to the loans that the two of you took out? Who should continue to pay them off?
The basic rule is that you both remain jointly and severally liable for the repayment of each loan that you took out together, even after you have separated. This means that the total amount of the remaining debt can be claimed from both of you.
Moreover, the Consumer Credit Act* forbids any changes (e.g. the loan amount, guarantee) to an existing credit contract, even if this is requested with mutual consent. That means that a new contract** must be drawn up for each amendment.
Did you take out a loan together to finance a car, a new interior, a trip or anything else? If so, then you are both severally liable for the repayment of that loan.
There are 2 options:
- You continue to pay off the loan together until its expiry date. In this case, nothing actually changes and you both remain jointly and severally liable.
- You choose optional redemption of the entire amount and potentially ask your ex to pay his or her portion back. Seek advice at your branch about the procedures, conditions and potential costs linked to this.
- Do you want to repay early, but your finances are insufficient? Call in at your bank. In some cases the bank can assign you or your ex a new loan**.
Line of credit
Is a line of credit linked to your joint account (authorized account overdrafts) or one of your partner's accounts for which you also signed? You then both remain jointly and severally liable. Therefore, make sure you check this thoroughly and take the necessary steps to protect yourself.
- You have a joint account with a line of credit
You are both jointly and severally liable for the repayment of the amount withdrawn on the line of credit. Nevertheless, you can cancel the line of credit in order to prevent misuse in the future. You can keep the joint account if you so choose.
- You are the guarantor for a line of credit linked to your ex-partner's account
You are also jointly and severally liable for the repayment of the amount withdrawn on the line of credit. The only way to avoid assuming liability for future withdrawals is to cancel your guarantee. In that case, the bank may also cancel the line of credit. Your ex can open a new line of credit** after you have officially separated. Of course, this also applies vice versa, namely if your ex-partner is the guarantor of a line of credit for your account or if he or she also signed for it.
To cancel a line of credit, it is best to visit your bank. They can give you information about the options, conditions and potential costs.
What about a new loan while the separation is not definitive?
If the separation is not definitive yet, then the signature of both partners is almost always necessary in order to take out a new loan. There are of course exceptions. Make an appointment at your branch to discuss your specific situation.
Get in touch with your bank as soon as possible. Think beforehand about what you want to do and, if necessary, use our banking checklist in the case of divorce or separation. Make an appointment so that one of our employees can help you discreetly and efficiently.
* A consumer loan is a loan granted to a consumer in order to help them:
- buy movable property (e.g. a car, a television)
- purchase a service (e.g. organising a wedding)
- pay for various private expenses within the framework of a line of credit
** Remember, borrowing money also costs money.
The instalment loans and the authorized account overdrafts (line of credit on an account) are personal loans subject to the Consumer Credit Act of 12 June 1991. Offer reserved for private individuals who have reached the age of majority, on condition of prior acceptance of your application by ING Belgium and by mutual agreement. The general terms and conditions of ING loans are available at all ING branches and on www.ing.be.