Unfortunately a key time to think about the topics of debt and divorce should occur before the wedding. But for most people, divorce does not come before marriage and when a marriage does end in divorce; few couples are prepared to deal with the consequences of debt. Often, divorce cases and tempers flare over finances, making it even harder to divvy up debt reasonably and fairly. As a general rule, debt that accumulated prior to the marriage should remain with the individuals. Any debt incurred as a married couple will need to be divided, as these debts belong to both parties, no matter who bought the merchandise.

The Process of Debt Division

Dividing up money and debts is a process that requires certain steps to be successful. The first of those steps is for each party to open separate bank accounts. Cash that is in joint accounts should be divided equally if both parties are in agreement; otherwise, respective attorneys will need to place the money in an escrow account until the divorce court makes a ruling. Any accounts opened, including credit cards, should be closed or there is the potential for one partner to take advantage of the situation, leading to more debt. If the accounts cannot be closed due to an outstanding balance, request a freeze be placed on the account to prevent any new charges. Bills need to be discusses and decided upon as to who is responsible for making the regular payments. Any discussions and arrangements need to be put in writing. Since both parties names are still connected on the accounts and those accounts affect each party’s credit rating, it is imperative the bills get paid on time. A priority should be made by both parties to pay off joint debts before the divorce is finalized. This may require selling assets, such as your home to pay off debts.

Reestablish Your Own Credit Now

Once your debt arrangements have been documented and made legal, it is important to begin reestablishing your credit. Due to your divorce, your credit rating may have taken a hit so it is important that you get a copy of your credit report and check for incorrect information. It is also important that you check your credit report for suspicious activity, especially if your divorce was not a friendly one. Either party could potentially wreak havoc on your credit report out of spite.

If you are responsible for joint debts, make sure you pay them off, if only for your own benefit. While it may be tempting to want to hurt your ex's credit, you will also be making the same negative impact on your own credit history. Divorce is not easy for anyone. If one of the reasons you divorced in the first place was because of debt, it is time for you to be clear about your financial responsibilities and make arrangements to get the joint debts paid off as soon as possible to protect yourself and your credit. As a single person, your credit no longer will rely on someone else's credit, so you will need to repair and rebuild your credit as high as possible if you intend to qualify for loans, mortgages, and additional credit cards in the future.