Divorce and Your Debt
Ready to settle your divorce and take your half of the cash? Not so fast… don’t forget about your portion of the debt as well.
Over the years, many households rack up debt by buying things such as a house, cars, or luxury vacations.
Are you aware of your debt?
First things first, you need to know what you are on the hook for. A great way to find this out is to pull your joint credit report. This will show what debts are present. Once you get a good idea of what debts your household has, you can start to total these balances and payments up to see what it will take to either pay them off or continue to pay them on a monthly basis.
When the divorce is settled and the court has given you your portion of the debt, you will be able to factor that into your after divorce budget.
What about future debt?
You feel relieved. You’re good with money and know you can tackle your portion of the debt no problem. You believe you are in the clear but you forgot that your name is associated with the credit card account that your ex just purchased that $5,000 trip to Europe that he or she has always wanted to go on.
Now that debt is on your shoulders too.
When going through the divorce process be sure to take into consideration joint accounts and how they can impact your future.
We don’t want a nightmare like this to happen to you!
Am I still responsible for my ex spouse’s debt?
Wait a second, I just checked my credit and realized my ex hasn’t been paying his or her car payment! Why is it hurting my credit? It’s not even my car.
You are exactly right, but when you originally purchased that vehicle, you both signed on the dotted line. Just because your debts are split by the court doesn’t mean that you are not responsible for what you originally signed up for.
If your ex is not paying their share of the court issued debt, you can get legal help to have it enforced. Be mindful that even if you seek legal help, it can be too late to prevent negative effects on your credit.
But there’s good news… you can protect yourself from a scenario like this from happening.
Are you protecting yourself?
After your divorce, you want to become an independent person and your finances should be no different. One of the best ways to protect yourself and your credit is to transfer each of your debts into your own name.
Transferring your debt into your own name can be a bit of a challenge after divorce, so doing it beforehand can save a bunch of headache in the long run. This can eliminate any hidden debt associated with your name.
You will thank yourself later when you go to make your next big purchase and you already know what you are personally responsible for.
Knowing your debts and how they can affect you is a vital part of a healthy financial future.