Less than four in ten adults know both partners are liable to pay the entire loan back, and that the bank may pursue either one of them for the full amount, according to a recent report from SavvyWoman.co.uk.

Sarah Pennells, money expert and founder, said:

“Unfortunately, when relationships break down and 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, so I really urge consumers to be aware of what they are signing up to and to seek advice if they are unsure.”

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Banks are also being urged to make information surrounding responsibilities for any debts clearer and more concise.

Pennells added: “At the moment, some banks just cover this in their terms and conditions – which can run to many pages – while others ask couples to sign a separate letter spelling out who’s responsible for any debt on a joint loan.”

Throughout 2012, the Financial Ombudsman Service saw a continual increase in the number of enquiries and complaints about joint accounts and loans where a relationship breakdown had been a factor.

Financial problems can often put a strain on a relationship and, if to the relationship ends and one party re-examines their joint finances to find defaults, missed payments or extra borrowing, disputes can emerge.

Martyn James, from the Financial Ombudsman Service, said: “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.”

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

 

Ed Ware, a spokesman for StepChange, said: “Banks must show understanding to clients’ circumstances, especially when the changing economic situation may leave them financially vulnerable”.

Here are a few tips on dealing with joint acconts and financial agreements, should your relationship breakdown:

• Freeze joint accounts – if you think your ex will run up debts. Contact the bank as soon as possible to freeze the account or put a restriction on it. This ensures neither party can take money out without the other’s knowledge.

• A fresh start – both parties need to arrange for joint accounts to be closed and to open new accounts in their own names. Ensure the bank or building society is informed on how to handle any standing orders or direct debits; how money should be divided and how any overdraft will be dealt with. Remember, if the bank has always addressed information to one partner, it will continue to do so unless told otherwise.

• Personal confidentially – if leaving the family home, banks should keep new contact details confidential when asked. Remember to remove your name from household bills you are no longer required to pay.

• Keep the peace – try and reach an agreement with your ex about how the debt will be repaid, and talk to your bank to see if they can help. Even though both parties are liable for the entire debt, the bank should deal with cases sympathetically.

• Consider drawing up an agreement – if you’re going to take out a joint account or loan with your partner, consider drawing up a short agreement about what happens to the debt if you split up. At the very least, it will force you to think about the options should the worst happen.