Post-divorce Debt Management

Divorce is an emotionally and physically gruelling endeavour for both parties. The problems get bigger when spouses start dividing their estate, especially if they did not have a pre-nuptial agreement. You have to establish and follow post-divorce debt management to move on with your life.

Divorce and Joint Debts

A couple that separates or divorces that have outstanding debt are fully liable. If you and your ex-spouse have a line of credit or credit card debt totalling $6000 before separating, you cannot evenly split the debt 50% each. From the creditor’s point of view, making that assumption is incorrect; you are both liable to pay the $6000 debt.

If you file bankruptcy to eliminate the outstanding debt the lenders cannot collect from you, but they can collect the whole amount from your ex-spouse.

You have an option to contact your bank and ask if it is possible to create two different loans, in separate accounts to pay off the joint debt before the divorce. Creating separate loan accounts enables both parties to know what they agreed to pay.

If you and your ex-spouse cannot pay the debt, both parties may file a consumer proposal or bankruptcy.

Managed Shared Accounts

Certain situations do not allow for quick refinancing or close of shared debts after divorce. Large loans and mortgages are difficult to refinance. In such cases, the divorcing parties may work together to open and manage a shared account. Keep in mind that your credit score is affected, if your ex-spouse is unable to manage the shared account.

The ideal way to manage shared debt is by creating an online account. This enables both parties to login and check the payment status of debts. If you see that there is outstanding debt for the month, contact your ex-spouse or pay the balance to avoid a lower credit score.

If you have smaller debt during your relationship that you can afford to pay off, it is best to do so quickly prior to the separation. An example of this may be payday loans. If you have a payday loan taken out during your relationship that may have been used when you were together, then it is best to settle this right away to avoid late penalties as stated in your loan agreement.

Payment troubles happen for a variety of reasons. A spouse may be intentionally delaying payments to ruin their ex’s credit score or just do not have the funds to pay on time. It is best to communicate with each other to stay on the same page when it comes to paying off the debt.

These enable you to navigate the complexities of a post-divorce debt management plan. Managing and paying off debts help you begin a new life after divorce.