Handling Defaulting on Debts During a Divorce
Divorce can become a complicated subject, especially when debt becomes a part of it. If you are a married person, then you know what that means. There have been cases where one person walked away without paying a single cent while the other went bankrupt. It could be a nightmare for the one paying the debts.
How you handle debts after your split can have a major impact on your credit.
Debt on property
In states like California, both you and your spouse are liable for the debts incurred after you got married. It does not matter in whose name the account is. Both of you are responsible for the property purchased and the debt as to be shared. In other states, the debt is paid off by one person only. It might not sound fair but that is the law in those states.
Debt on credit accounts
The same goes for credit accounts as well. Since the credit was shared by you and your spouse, the debt too must be shared. Even if the divorce rules say that your spouse is responsible for paying the debt, you will still be a part of it. You miss the payments, and you become a defaulter. If you become a defaulter, then your credit score drops, making it harder to get credit in the future.
Handling joint debts
After you get divorced, make sure you close all joint accounts that are in your and your spouse’s name. Remove your spouse’s name from the authorized user list. Try getting the account converted into individual accounts if you can.
Try paying off as many debts as possible before the actual divorce. It will keep you prepared for any extra charges that might incur during your divorce proceedings.
When you close accounts, make sure that the credit accounts are in your name. Doing so will give you control over your money and you would not have to worry about any unknown debts.
It’s common among couples that one person borrows while the other spends. If you are one of them and you are on the spending side, then talk with your partner and work out a common ground. Understand that if your credit score is low, future lenders would not lend you money. Before you get divorced, try clearing as much debt as you can together.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.