Divorce is stressful enough without any additional worries to contend with. If either you or your ex has considerable debt, though, you will face the dilemma of determining how to handle this. Marriage is not just a union of two lives—it is also typically a union of finances. Separating finances and debt is a tricky issue that you should address carefully with help from a legal professional.
Debt is not always split down the middle in a divorce—despite this being a common expectation. There are several things you need to understand and take into consideration before you make any assumptions about what will happen to your debt in a divorce.
Was debt accrued jointly?
Many couples end up accruing debt together. This is true if you sign a mortgage together or co-sign kids’ student loans together. There are many other instances, too, where you might be mutually liable for debt. In such cases, it is important to make a plan for repayment that works for both parties. It may be most advantageous for one of you to assume the debt, for example.
Do lenders agree to terms?
When you begin formulating a plan for repaying joint debt after divorce, you need to remember that you and your ex are not the only ones who will have a say in the process. Your creditors will ultimately have to approve any changes made to your account, including taking one of you off or changing your repayment plan. Before legally agreeing to any of these changes, be sure they comply with the terms set forth by your lender.
Have you joined accounts?
If you joined accounts that you and your spouse initially established separately, it may be easier to separate them again. Credit cards, for example, are often joined after marriage—either by merging two accounts or adding your spouse as an authorized user on your own. In both scenarios, you should contact your lender to inquire about the procedure for handling the account after the divorce.
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