Disclosing Debts in Form E: What You Need to Know During Divorce
When people think about financial disclosure during divorce, they often focus on assets such as property, savings, pensions, and investments (the norm).
However, debts can be just as important.
In many cases, the way debts are treated can have a significant impact on the overall financial settlement. This is because the court does not simply look at what assets exist, but also at what financial obligations need to be met.
This is why it is essential to ensure they are disclosed accurately and fully within your Form E.
What Is Form E?
Form E provides a detailed picture of each party’s financial circumstances, including their income, assets, pensions, liabilities, and ongoing financial commitments.
Both parties have a legal obligation to provide full and frank financial disclosure. This means being completely open and honest about your financial position.
Failing to disclose information accurately can have serious consequences, including financial penalties, costs orders, and in some circumstances, the reopening of a financial settlement long after it has been agreed.
If you are unfamiliar with the process, we have created a detailed guide explaining exactly how Form E works and what information you will need to provide:
Read our guide to completing Form E here
How Are Debts Disclosed in Form E?
Debts and liabilities are covered within Section 2 of Part 2 of Form E.
You must disclose all liabilities apart from mortgages and any overdrawn bank, building society, or National Savings accounts, which are disclosed elsewhere in the form.
This includes:
- Credit card balances
- Store card debt
- Personal loans
- Bank loans
- Hire purchase agreements
- Other outstanding credit agreements
If any liability is held jointly with another person, you must provide details of the other account holder.
You will also usually be required to provide supporting documentation, including up to 12 months of statements for the liabilities being disclosed.
Providing clear and accurate information is essential. Incomplete disclosure can create delays, increase legal costs, and potentially undermine any future settlement.
Are Debts Always Shared?
Not necessarily.
One of the most common misconceptions is that all debts are automatically divided equally between spouses.
The reality is far more nuanced. The court will consider a number of factors when deciding how a debt should be treated, including:
- When the debt was incurred
- Why the debt was incurred
- Who benefited from it
- Whether it was used to support the family
For example, a credit card used to pay for household expenses, family holidays, or childcare costs during the marriage is more likely to be viewed as a matrimonial debt.
By contrast, a personal loan taken out after separation for an individual’s sole benefit may be treated differently.
As with assets, the court looks beyond whose name appears on the paperwork and considers the wider circumstances.
What Happens to Debts During a Financial Settlement?
The court cannot simply move a debt from one person’s name into the other person’s name.
However, it can take debts into account when deciding how assets should be divided.
For example, imagine a husband has a £20,000 personal loan in his sole name that was used to fund home improvements for the family property during the marriage. Although the loan remains legally in his name, the court may recognise that both parties benefited from it and factor this into the overall settlement.
Every case is different, and the court will always look at the wider financial picture to achieve a fair outcome.
This is particularly important where there are substantial debts, business liabilities, tax liabilities, or more complex financial arrangements.
The Consequences of Financial Non-Disclosure
Financial disclosure is the foundation of any fair financial settlement.
If a party deliberately fails to disclose debts, liabilities, assets, or income, the consequences can be severe.
The court has the power to:
- Set aside an existing financial order
- Re-open financial proceedings
- Order the non-disclosing party to pay legal costs
- Draw adverse inferences from missing information
In the most serious cases involving deliberate dishonesty, criminal proceedings under the Fraud Act 2006 may also be considered.
The message from the court is clear: full and honest disclosure is not optional.
Getting Advice Early Can Protect Your Position
Every divorce is different.
While some debts are straightforward, others can involve complex questions about responsibility, affordability, and fairness. Understanding how your liabilities may be treated can make a significant difference to the outcome of your financial settlement.
If you are preparing your Form E or are unsure how debts may be dealt with in your circumstances, obtaining specialist advice early can help you avoid costly mistakes and ensure your financial position is properly protected.
At NjP Solicitors, we specialise in divorce and financial remedy matters throughout England and Wales. We can help you understand your disclosure obligations, review your financial position, and guide you through the process with clarity and confidence.