If you are facing a divorce, you already know how stressful the process can be. There is so much to think about, but one of the biggest things that may worry you is your finances.
Understanding the role of debt in your separation can help remove some of the stress from your divorce proceedings.
Who is responsible for the debt?
Debt liability in divorce depends on whose name is on each loan. If the names of both parties are on an account, both you and your spouse share responsibility for the debt associated with it. If only one name is on an account, that person is solely liable for the debts incurred. For example, if you co-sign on a mortgage with your partner, you are both liable for the loan amount. Similarly, if you signed up for a credit card in your name only, you are technically responsible for that debt.
How can you protect your finances?
Once you know your relationship is heading for divorce, it is important to make it official by legally filing for divorce. Doing so can help protect your money from that point forward. To avoid your spouse racking up debt on your joint credit cards, consider paying off the current balance and removing yourself from the account. Taking this step early on in the divorce can protect you from having to pay down debt you did not incur. You should always monitor your credit score, but you should especially keep an eye on it during a divorce to make sure your spouse has not added you to any new accounts.
Knowing who is responsible for the debt in your separation and some ways to protect yourself can make the divorce process simpler.