Finances and Breaking Off Relationships
A break up is difficult at any time, but if you have been living together, it can be even more difficult to negotiate the separation and to recover financially, as well. When you are living together you have been sharing expenses, and unless you time your break up with the end of a lease you will still be responsible for the rent of your apartment. It can be even more complicated if you purchased a place together.
If one of you is considering breaking off the relationship due to a job transfer, you may be making difficult decisions. You do not have the same protections as a married couple though you may be facing similar problems to the financial ones caused by a divorce.
Close Your Joint Accounts
First, you need to close down any joint accounts that you shared. Unless you were married, you should have kept separate accounts, and just had a joint account for household expenses. However, if you did not do that you will need to divide the money you contributed to a savings account fairly. This means that you should both get the money you each put into it. If you have any automatic payments or direct deposits with those accounts you will need to change them. This can be difficult to do if you are not separating amicably.One person should not just shut down the accounts and take all of the money.
Choose Who Gets the Apartment
Next, you will need to determine what to do about your apartment lease.
For an apartment lease, you can either buy it out, and split the costs or see if the apartment will let you transfer it to one person’s name for the duration of the lease. You do not want to leave your name on anything if you are no longer responsible for the payments. You can transfer the utilities to your name without too much trouble.
If the lease is to just one person in the relationship, then he should stay in the apartment and the other partner should move out.
If you both own a home, you may decide to sell it or one person will buy the other out. This means that the person who keeps the home will refinance it in her name only, and pay a certain amount of the equity (usually half) to the person leaving the home. If the partner that wants the home cannot qualify for the mortgage on her, then you should sell the home and split the proceeds.
Divide Up Your Stuff
If you both came to the household with items such as furniture or pots and pans, whoever brought the items should get them. If you purchased the items together you will need to sit down and split the items up. If you have a difficult time discussing this rationally you may want o hire a mediator to sit down and do it with you. This process is similar to what would happen if you were to file for a divorce. The mediator can help you work things out fairly, and make compromises.
Split Up Joint Debt
If you have credit cards, car loans or other debt together, you will need to split it up as well. First you should decide who is responsible for what, and then have each person refinance the debt in his name only so that the other partner is no longer responsible for it.
If you cannot refinance a loan because of poor credit, then the item attached to it should be sold. For example the car should be sold to pay off the car loan if the loan is to both of you and your partner cannot refinance it, and you already have a car. Credit card debt needs to be divided and all joint accounts shut down. Otherwise you will be held responsible if your partner defaults on payments.
Finally, you will need to find a new place to live, come up with a new security deposit and begin planning your finances on your own again. This is a good time to set up a new budget that allows you to get out of debt, and begin saving for the future. When you enter a new relationship you should keep your finances separate and operate on a household budget until you get married. This will make any break ups you have in the future easier to deal with.