If you have separated from your spouse or civil partner and are waiting for the divorce settlement, then debts incurred as part of matrimonial expenditure, even if it was in one party’s sole name, may be capable of being offset against other assets, depending on the circumstances and what the money was used for. However, if you are already divorced or were never married, the process of recovering a debt is very different. This article looks at the options for recovering money owed by an ex in these circumstances.
If you have separated from your spouse or civil partner and are waiting for the divorce settlement, then debts incurred as part of matrimonial expenditure, even if it was in one party’s sole name, may be capable of being offset against other assets, depending on the circumstances and what the money was used for. However, if you are already divorced or were never married, the process of recovering a debt is very different. This article looks at the options for recovering money owed by an ex in these circumstances.
If you have a family law issue and you are concerned that you may require legal advice to understand your options, contact specialist family law solicitor Joanne Major. Joanne is the founder of her specialist family law firm and has spent her 25-year legal career specialising in family and matrimonial cases.
What steps should I take before taking court action?
It is always recommended to try to informally settle your dispute first before taking further action. Firmly reminding your ex they owe you money is often enough to elicit payment. Here are our tips for trying to recover money owed by an ex before making a claim:
- Contact your ex and appeal to their sense of fairness, perhaps offer to accept instalment payments instead over an agreed period of time. If this can be agreed, back it up in writing so that you can use it as evidence if you do have to make a subsequent claim.
- Send your ex a formal letter demanding payment of the outstanding sum within a certain period of time.
- Attend mediation. Although this is not free, it is much cheaper than going to court and generally a lot faster.
If the above suggestions are unsuccessful, then you can use the small claims court to claim not only the money owed but also court fees and interest at the court rate of 8%, which can be calculated from the time you should have been repaid.
County court claims
In the first instance, communication is key to sorting things out between you before embarking on a course of legal action, because it will save you a lot of time and expense. However, if you are unable to do this, the small claims court is usually your next best option. If you have some form of agreement in writing, this should be sufficient evidence to support a monetary claim through the court. Other considerations include whether the payment was made clear it was a loan, or if your ex considered it a gift. Additional evidence, such as texts or voicemails from your ex thanking you for the loan, proof that they have already paid some of it back, or evidence that your income is too low to justify making substantial cash gifts will all help support your case.
Even if there is no evidence of an agreement, you could still use the small claims court but would need to persuade the judge that you transferred the money, and it was “more likely than not” that the money was a loan rather than a gift.
Depending on how much you are owed, making a court application is a relatively simple way for you to claim a debt. There is no minimum amount you can claim for, however, the lowest amount you will pay in court fees, at the time of writing, is £35, so any sums owed under that would mean you were losing money. The deadline to begin a claim, called the limitation date, is six years from the date the other person broke the agreement.
Making a statutory demand
As long as the debt is disputed, you can make a statutory demand, which involves writing a formal demand for what you are owed. Once it is received, the debtor has 21 days to pay, failing which you may use the statutory demand to petition the court for a bankruptcy order. Within the 21 day period, the debtor can apply to have the debt set aside. If you are considering using this route, it is advisable to seek specialist debt recovery advice to ensure the statutory demand is drafted effectively and that every detail is correctly covered in case further action is necessary.
Bankruptcy proceedings
If you are owed more than £5,000, you can use bankruptcy proceedings to attempt to claim the money you are owed. When a bankruptcy order is made, the subject of the order must provide an official receiver with information about their finances, assets, and income. They will also have to declare they are bankrupt to anyone who offers them a loan over £500 and appear in court to explain why they have not repaid the debt.
Under a bankruptcy order, assets and finances can be seized to pay off the debt. However, there is no guarantee the proceeds will be sufficient to cover the sum outstanding. In addition, if the debtor owes money to other people, they could be prioritised over yours.
What evidence should I collect to support my case?
Any of the following could be used to support a money claim and prove your case:
- A written agreement
- Any other written evidence showing you both intended or had agreed a loan. For example, emails or text messages sent at the time of money transfer
- A letter or statement from someone who was present when you and your ex agreed the arrangements for the loan who can say what they heard you both discuss
- Had money been loaned and paid back previously? If so, this would show you already had an established routine, and the same terms would apply on the latest occasion
- Can you demonstrate you had never made large gifts of cash to your ex before? If you don’t have much money, it may help your case to provide details of your income, outgoings and any savings to show that it was unlikely the money would have been gifted.
If my ex owes me money, can I go to the police?
If your ex has refused point blank to pay you back, even if you report the matter to the police, they will not get involved. This is because it will be deemed a civil matter requiring civil law solutions, such as those set out above.
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