Divorce is often far more involved and complicated than spouses expect, sometimes leading to ongoing financial difficulty well after the divorce finalizes. Even worse, couples can avoid many of these frustrations with some careful planning and execution during the divorce process, but they often overlook crucial aspects of debt division out of a desire to get the marriage behind them as soon as possible.
If you and your spouse face divorce, it is wise to order joint credit reports from each credit reporting bureau. Even if you think that you know all of the debt each of you has to contend with, it is wise to double check and identify all of your debts so that you can address them fairly and comprehensively. Once you identify all your debts, you may consider working in both parties interests to pay off these debts in full before your divorce. While this may deplete some of your existing resources, it also eliminates a number of potential conflicts in the future.
Any debts that you do not pay off before divorce, you must divide in during property division. It is very important that you specifically address any debts that you jointly hold, or that creditors could reasonably pursue either party to satisfy.
Ultimately, you want to make sure that you and your spouse do not keep any debts jointly, and that creditors do not have any reason to pursue one of you for payment on the debt if the other fails to make payments later on down the line. If you don’t address this issue fully, you may find that your credit score suffers significantly, often before you even know it’s happening.
Be sure that you seek out the guidance that you need to achieve your divorce goals effectively. Professional legal counsel ensures that you understand the issues at hand while keeping your rights and priorities secure throughout the divorce process and beyond.
Source: The Balance, “A Guide to the Most Common Financial Issues of Divorce,” Deborah Fowles, accessed Jan. 12, 2018