Tips for getting rid of debt after your divorce

For many people, divorce means having to live on a leaner budget. It may also mean home downsizes and other big life changes.

In fact, after your divorce is finalized, you may feel overwhelmed at the amount of debt you still have to deal with. Here are some tips to help.

Beware of debts your ex agreed to pay off

If the divorce decree states your ex will pay off certain debts, know that creditors still hold you ultimately responsible for them if your name is on the title. So, it is best to plan proactively and ask that your ex pay these debts off before the divorce is final. If that is not possible, keep an eye on these debts to make sure your ex pays them (or not) and to avoid unpleasant surprises.

Start earlier rather than later if you consider bankruptcy

Too often, people wait until they are in a huge financial hole before they consider filing for bankruptcy. For example, they may withdraw money from 401(k) plans to stay afloat when it would have been a good idea to file earlier. (401(k)s are off-limits in bankruptcies, except to the IRS, which tends to stay away from them as well.) If you are having trouble paying your bills, now is the time to think about what may be necessary down the road.

Avoid new charges when possible

Some new expenses may be unavoidable. For example, if you pay $200 more a month in house rent than you were before the divorce because you had to move, that is not an expense you can simply decide to get rid of (although, taking in a roommate for a year could help financially). However, when possible, avoid taking out loans and charging expenses to your credit card and taking on even more debt. Need a car? It may be better to settle for an older one and save up for a better one you have an easier time affording in a few years.