As you get divorced, you and your spouse must agree on how to deal with any outstanding debt. Trying to pay off this debt before or during the divorce is essential, as it can be an onerous burden. Although it may have been part of the marriage, debt doesn’t have to be part of the divorce. With some careful planning and execution, you can work towards a debt-free future.
As you go through the divorce process, there are some key steps you’ll need to take to sort out financial assets and liabilities. This includes everything from debts and credit to property and investments. The division and responsibility for each will be part of the divorce settlement. Here are some key things to remember as you go through this process.
Know Exactly What You Owe

It’s important to know exactly what you owe. Make a list of all your debts, including:
- Mortgage
- Credit cards
- Auto loans
- Student loans
- Personal loans
- Legal fees
- Tax debt
- Any other debts, including loans from family members
Identify Responsibilities While Getting Divorced
Different types of debt can be easier to split up. For example, student loan debt is typically the student’s responsibility alone. On the other hand, an auto loan might be assumed by whoever owns the car.
Debt from using a credit card can take a lot of work. This type of debt may be a joint responsibility for some people. In contrast, others may use their cards for expenses that the whole family shares. Dividing up these debts might be a key money issue in certain situations.
Debt is often seen as something one person is responsible for. Still, when a married couple has joint credit cards, both parties are equally liable for the debts incurred. In community property states, even debts incurred by just one partner are considered to be the responsibility of both partners.
Establish A Deadline

Divining your debts will become increasingly difficult the longer they continue to grow. To simplify things, set a date after which no new joint debt will be incurred. This will most likely be the date of separation (physical or legal). Make a note of all debt balances as of that date.
After a separation. Any debt incurred on credit cards is the responsibility of the spouse who made the purchases. To avoid any disagreements, it is best to use completely separate cards.
One way to help protect your credit after a divorce is to close joint credit accounts. This will prevent your ex-spouse from racking up debt in your name. Once you’re separated, open up a new credit card for your expenses. This will keep your non-marital debt separate from the obligations you accrued during the marriage.
Be sure to remove your name from any joint accounts that your spouse will still use after the divorce. Although you may still be liable for debts incurred up to that point, you will not be responsible for any new debts your spouse incurs on those accounts. Similarly, revoke your spouse’s authorization on any funds held in your name. Keep careful records of all charges made.
It is essential to continue making minimum payments on credit accounts that bear your name, regardless of disagreements about debt responsibility. Failing to do so could affect your credit score and adversely impact your credit history in the future.
Plan Your Debt Repayment
Here are some options for handling or eliminating joint credit card debt.
- Agree to transfer portions of joint debt onto individual cards and cancel the standard cards.
- Agree to use mutual savings to pay off all or a part of the debt.
- Agree to sell a car or other asset and use the money to pay off outstanding debts.
- Agree to use a home equity line of credit in a jointly owned house.
In many divorces, both parties must agree on who will keep which assets. This can often be a complex process, but an agreement can be reached by offering an equalization payment. An equalization payment is when someone agrees to take on payments towards credit card debt in exchange for keeping the car or another valuable item.
Bankruptcy may be an option to consider when your debt seems insurmountable. Filing for bankruptcy with your spouse can help protect both of you from being stuck with joint debt. Bankruptcy will not affect payments for a child or spousal support. Be sure to consult a bankruptcy attorney before taking any action.
Final Thoughts

It’s important to compare your list of debts with your official credit report before finalizing a divorce to ensure no surprises and that any outstanding debts are assigned to one spouse or the other.
Even though your divorce is final, you may still be liable for any outstanding debt. This is true even if your spouse agreed to pay it. So, what happens if your ex files for bankruptcy or doesn’t pay the debts? Your creditors can demand that you pay the total amount of the debt plus interest and penalties. Remember, your divorce decree is just an agreement between you and your ex-spouse – it doesn’t legally change anything about your contracts with your lenders.
Protecting yourself financially in a divorce is essential by ensuring you are not responsible for any joint debt. One way to do this is to either pay off the standard cards together or divide the debt on common cards and transfer it to cards with individual names. This will help safeguard your finances and ensure you are not liable for your partner’s debts.
The first step to getting out of debt is creating a plan. This plan may involve some difficult decisions, but it is necessary to move forward. With a dream, it will be easier to reduce your debt.