Divorce: The Good, The Bad, The Debt

The divorce – the ‘big D’ – is finally done…signed, stamped, and sealed by the judge.  The knots that once bound you together have unwoven and you are on your own, but wait….the debts. What happens with those?

You are keeping this, they are paying for those.  Everyone is in agreement.  It’s written into the divorce decree.  That’s all fine and dandy.  Life is moving onward…until you try to apply for credit.  You find out that debt that they were supposed to be paying on is 4 months behind on payments.  Your jaw drops.  “I’m not responsible for that debt; the divorce decree says they are now obligated to pay that debt.”

Even if the debt was taken out jointly, it does not matter to your creditors/lenders what the divorce decree says. 

That means you are both on the hook for that debt.  You both signed a contract agreeing to pay back that debt and nowhere in the contract is there a clause that says “in the case of a divorce we will only collect on the person the divorce decree says is responsible.” As nice as that would be, it’s just not there.new life loading concept on blackboard

The only way one person can be removed from the debt is if the other person refinances that debt into their own name.  Sometimes this works with no problem.  More often than not though, it took both of your incomes to qualify for that debt. Therefore, the creditor may not be able (or willing) to refinance the debt.

While there may be legal action you can take because the other person was supposed to pay that debt and has not, legal action could be very expensive.  It could take months and months of litigation, time off of work, and maybe even feuding between the two of you.  In the end, that person still cannot afford to pay the debt…plus not much may be accomplished from that time, money, and energy spent.

LSS can help. We can help you create a balanced budget, review your credit reports, and likely make the debts more manageable with a Debt Management Plan. By making your payments on a DMP, creditors usually decrease interest rates and in some cases even decrease monthly payments. A DMP could be the best way to avoid the time, effort, and struggle of a legal battle…and maybe even decrease or eliminate arguments. Not to mention, your unsecured debts would be paid off in 5 years or less, saving you a lot of money in interest charges.

Contact us today at 888.577.2227 to see how we can work together to conquer your debts once and for all. Or instead of calling, you can GET STARTED ONLINE right now. Take action today for a better financial future.

Author Katie Eastman is a Certified Financial Counselor with LSS Financial Katie ECounseling and she specializes in Budget and Debt Counseling.

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Posted in Debt, Debt Counseling, Debt Management Plan, Divorce

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