Divorce and debt is a combination no one wants to face, yet here you are. The good thing is there are a few things you can consider, which could make this less complicated. If you are still speaking to your partner, see if any of the following tips can help you out now regarding debt.
Understand the Debt
You must know the debt you have. Go over the details about each debt you have together. Ask yourselves which debts have the highest interest rates, a fixed loan amount, or flexibility. Fixed loans are things like mortgages, while flexible loans are things like credit cards that allow you to raise limits if you qualify. The more you understand these things, the easier it will be to decide what to do next.
Paying It Off
The next thing you want to do is figure out if there are debts you two might want to pay off. Ideally, you will find ways to pay off debt and save money now rather than deal with everything that might happen later. The more you argue about things, like who will be responsible for what, the more you’ll be in court. This is going to be costly for you and your partner. Try to pay off unsecured debt like credit cards and deal with revolving debt because your partner could quickly run up these debts, leaving you to deal with them. The goal is to part ways without owing anything so that you can both have a clean start.
Debt Responsibility
When going through a divorce, you’re probably worried about who will be responsible for what. This is the biggest fight you might have, and one reason you should strive to pay off all debt. Sometimes, figuring this out is easy enough, like if you decide to keep the car, you’ll be in charge of that debt. This is not always the case if you use a credit card in your name. This debt seems like it’ll be yours alone unless the judge determines that your partner benefited from that debt. In that case, the debt has to be split. Keep a journal and write down everything you can about what you owe.
Closing Accounts
Once you’re done paying something, you may be tempted to close those accounts. This may not be a good idea, as you imagine. If your spouse does not have much credit history besides the accounts you’re thinking of closing when you are done paying them off, it might be a good idea to keep them open. An established credit history helps improve credit scores, but closing older accounts can hurt you or your partner. It would be best if you talked about what would be the best solution after paying off a credit card.
Dividing Assets
It would be great if you and your partner walk away from the divorce with no debt at all, but this isn’t always possible. You must recognize when you can’t do anything about the debt you two share but deal with it amicably even after a divorce. For example, you don’t want to sell your assets if this includes investment properties or stocks. These could help you both out in the long run. You can sell some assets to pay off some debts, but make sure these are things you won’t miss. The same thing goes for your partner.
These are some ideas to point you two in the right direction. You could also talk to your attorney to see what they recommend if your goal is to walk away as free as possible.
