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How are debts treated in divorce/ financial settlement?

June 22, 2022 jarmans 0 Comments

What are “Hard” and “Soft” debts and how can these effect my financial settlement?
The recent case of P v Q [2022] highlights just one of many factors often overlooked when
determining financial settlements. In this case HHJ Hess provides guidance as to which debts may be
taken into account for a financial settlement and which debts may not, making a distinction between
“hard” and “soft” debts. 

In short P v Q [2022] emphasises the fact that some funds acquired by way of loans may still form
part of the matrimonial pot, despite the fact that the debt may need to be repaid. 
The distinction between “hard” and “soft” loans is becoming especially of note in cases where
monies have been loaned by family members and friends. This is becoming increasingly relevant in
today’s climate where it is not uncommon for family members to contribute towards a deposit for a
home etc.

Although separation and divorce can be a daunting time, it Is important that you understand your
rights before making any decisions as to how finances should be divided. The Jarmans team are
always happy to assist and hope to make the process as easy as possible for you with an empathetic
and pragmatic approach. Please feel free to contact us for a one on one, in-depth consultation.

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