How To Handle Debts In A Divorce

Some people do end up accumulating a mountain of debt in marriage. Financial instability and the pressure of increasing debts are often stated as major causes of divorce.   

Individual Debts And Divorce

If you live in a community property state, any debts incurred while you were married are generally the responsibility of both parties. If you have separate credit cards and are not joint owners, during divorce proceedings you with both be responsible for each other’s credit card debt – as long as it was accumulated during the marriage. 

These are the states that fall under the community property laws in the United States: 

Arizona California Texas Louisiana Washington Idaho Nevada New Mexico Wisconsin

Joint Debts And Divorce

Over the years of marriage, a couple might accumulate debts that have been legally signed and consented by both individuals. Such debts are called joint debts. 

Mortgages And Divorce

During a divorce, you can handle the mortgage in three ways. 1. If you wish to continue to own the house, you could try buying out your ex’s equity with the help of your mortgage provider. 2. If your ex wants their name removed from the mortgage, you could try refinancing it by taking a loan under your name. Keep in mind that it can be extremely difficult to refinance a joint mortgage by seeking a loan with only one borrower’s individual’s credit score. 3. In most circumstances, the best way to tackle the mortgage debt in divorce is to sell the property and use any equity to pay off the mortgage.   

Credit Card Debt And Personal Loans In Divorce

If the credit card is under your name, you are the only one accountable for debt repayment (if you do not live in a community property state). 

Auto Loans And Insurance In Divorce

If you bought a car through a joint auto loan with your spouse, you will need to decide who keeps the car. If you are going to be the sole owner of the car, you will need to coordinate with your financer to get your ex’s name removed from the contract. 

Secrets can ruin a marriage, but they can also overcomplicate a divorce. There have been instances of spouses hiding debts from each other, which can spring up as a nasty surprise while finalizing the divorce. 

Hidden Debts In Divorce

Swipe up now to read the full post!