Divorce and Debt – How to Handle Them Well

In a recent study, it has been noted that almost 50% of the marriages end in divorce. It has become a trend now. However, divorce not only impacts your emotional life, but it may even impact your financial life. An important part of splitting is to take care of your debts that you incur during marriage. Those debts which are in individual names can be easily handled but those debts which are jointly shared can create a problem.

Who Is Liable For The Debts?

It is very important to decide as to who is liable for the debts. If you are living in a community property state, then any debt which has been incurred during the marriage may not only be a liability of the person who has incurred it. Rather, the situation might be such that both the spouses might be equally responsible for the debt payments. This may be the case with those debts as well which has been incurred by one spouse without the knowledge of the other spouse.

In case of equitable distribution of states, the rules will be different. The court will assign the debt to the person who has incurred the debt. Thus, the other spouse will not be responsible for the payment of that debt. However, if you have jointly incurred the debt, then both will be liable for the payments. In that case, if one spouse does not pay his or her debt, then the other will be in a messy situation.

Here, you should also remember that no matter who is responsible for the debt as per the court orders, the lender will expect the debt payments on time. Also, in the eyes of the lender, the original loan contract supersedes the divorce decree. If any one of the spouse does not pay the debts on time, then it will have a negative impact on the credit of the person who has paid his or her portion of the debts.

However, it should also be noted that if your spouse does not pay off his or her share of the debts on time, then you have the rights to take legal actions against him or her. But again, it is also true that by the time you file a legal action against your spouse, your credit might have been destroyed.

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How to Manage Your Debts before Divorce

Before you finalize your divorce, it will be better if you could take care of your debts. You should make sure that you get the debt in the name of that spouse who has incurred the debt. This will make sure that you are not liable for the debt payments. However, it is also true that it will not be easy for you to do so immediately. Moreover, both the spouses should agree to it. If both of you can manage to do this, then both of you will be in the safe side.

Do not take your debts for granted. In divorce, your finances might go haywire if you do not take the right steps regarding your debts. If you cannot do this on your own, you might even take professional help.

Author: Richard Casteel

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Richard is the chief author of this blog. He worked as a financial advisor in money market form last 10 yrs. His financial sense in Share trading and any other trading is just outstanding. He just shares his knowledge and experience through this blog. You can contact him directly though CFD-Providers.com.

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