Advice for dealing with debt and divorce

On Behalf of | Aug 15, 2014 | Property Division

Money is often a source of marital conflict and strife. In many cases, when a couple decides to divorce, concerns over money and debt continue to be a source of major concern. Much the same way assets are divided during a divorce, debts will also be divvied up with both ex-spouses being held responsible for the repayment of certain loans and accounts.

It’s important to note, however, that the existence of a divorce decree that details debt repayment responsibilities means nothing to a credit card company or bank. If both spouses signed the agreement at the time the loan was taken out or credit card opened, both spouses are responsible for the repayment of outstanding debts.

Individuals who are concerned that the financially-irresponsible actions of an ex-spouse may continue to negatively impact their life post-divorce, would be wise to take certain steps. First and foremost, close all joint accounts that have zero balances to prevent an ex from accruing additional charges. It’s then important to request a hold on joint credit cards that have a balance to prevent any additional charges.

In some cases, an ex-spouse may agree to transfer the balances of joint credit cards to new individual cards. However, if a spouse refuses to do so, it may be best to assume the debt and work to gain a larger share of wealth during a divorce settlement to offset any losses.

When it comes to debt and divorce, it’s always best to pay off debt and separate financial responsibilities as quickly as possible. Doing so can prevent a disgruntled soon-to-be ex-spouse from taking action and harming an individual’s financial standing and future.

Source: Fox Business, “Debt and Divorce: 5 Steps to Make a Clean Credit Split,” Dawn Papandrea, July 14, 2014