Debt & Divorce: How to Deal with Debt Post-Divorce

someone calculating their debts

Are You Leaving Your Divorce in Debt?

Most people in the US carry some kind of debt, whether it is student loans, mortgages, or credit card debt. Married couples are no exception. Therefore, if you are divorcing, it is likely that you and your soon-to-be ex-spouse will have to deal with any shared debt as part of your divorce process.

Common types of debt married people must divide when divorcing:

  • Mortgages
  • Personal loans
  • Credit card debt
  • Student loans
  • Medical debt

If you and your spouse have shared debt, it will be divided equitably between the two of you during the divorce process. Depending on your divorce settlement, this will likely mean that you will have debt obligations post-divorce. Similarly, you may also have individual debts you brought into the marriage that will remain your responsibility post-divorce.

Why Is Debt Post-Divorce so Challenging?

Having debt post-divorce can be particularly difficult to deal with. It is well-documented that post-divorce, your day-to-day living expenses will increase. This is because you go from a combined household where you and your former spouse shared major expenses to a single household where you are responsible for all of your own expenses. Many couples also go from a two-income household to a single-income household.

This is a huge adjustment, and the extra burden of a debt obligation can feel crushing. It may also necessitate you to adjust your standard of living.

So what can you do? Below we provide some tips on what you can do before, during, and after your divorce to manage your debt. Keep reading to learn more.

Dealing with Debt Pre-Divorce

If you and your spouse are planning on divorcing, you may wish to assess your financial situation, including your debts, before filing. While this is not possible for all couples, it may be beneficial for you and your spouse to adjust your finances in preparation for your divorce to ensure that the process goes smoothly and so that you are both prepared for your post-divorce financial situation.

Things couples can do to prepare for divorce include:

  • Complete a full financial assessment, identifying all outstanding debts
  • Request a copy of your credit report
  • Have a conversation about who will be responsible for what debts
  • Refinance property and other financial obligations in the name of the person who will ultimately be taking on the debt post-divorce (ex: car loans and mortgages)
  • Sell your home and other shared real estate when you know that neither of you will want or be able to keep it

You should also get copies of any prenuptial or other marital agreements you may have. How debt should be handled in a divorce is a frequent feature of these documents, and they can help guide you as you go through the property and debt division process.

It is also important that you factor your legal expenses into your divorce planning.

Handling Shared Debt During Your Divorce

When a couple is going through a divorce, who pays the household bills, such as credit card payments, car payments, etc.? This is a question we are often asked. Generally speaking, the person responsible for paying the bills during your marriage will continue to pay until your divorce is finalized. They will also typically use the same marital accounts to do so.

Read our blog to learn more about how debts are divided during divorce proceedings.

How to Manage Debt Post-Divorce

After you are divorced, you will want to take stock of your financial situation. You will likely have new bank accounts in your name, and you will have to make a plan for ensuring that all of your bills are paid on time. This can be quite complicated, so you may find it helpful to work with a financial advisor or accountant.

Other ways to manage your debt post-divorce:

  • Set up automatic payments or calendar reminders to ensure bills are paid on time
  • Come up with a debt repayment strategy that works for you, such as the snowball method or the avalanche method
  • Sell property or vehicles that are still in both of your names to clear the debt
  • Remove your name from any outstanding debts that are in your name but which your ex-spouse is responsible for paying
  • Pay off the balances that you can or buy your spouse out

If you are dealing with joint debt post-divorce, it is important that you remain on top of repayments and that you do not miss a payment. Failure to make payments can result in you returning to court, which ultimately will cost you more money.

Similarly, if you have shared debt post-divorce, and your former spouse is not paying their share, it can negatively affect your credit. In this situation, it is best to reach out to your divorce attorney to find out what you can do to mitigate the situation. Do not ignore the problem and hope it will go away.

At Virga Law Firm, P.A., we have helped many clients deal with difficult debt situations before, during, and after their divorce. Reach out to our law firm online to schedule a consultation and find out your legal options.

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