As you prepare for divorce, don’t turn a blind eye to your debt. If you do, you could find yourself in for a big surprise post-divorce, which makes it much more difficult to establish a sound financial future.
You must prepare to divide your liabilities in a divorce, just the same as you will with your assets. Here are some tips to make this easier on you:
- Create a checklist: This should outline all of your debts, both big and small. Common examples include a balance on your mortgage, balance on motor vehicles, credit card debt, personal loans and home equity loans and lines of credit.
- Assign a number to each debt: It’s not good enough to list out your debts. You should also assign a value to each one. For instance, if you owe $10,000 on your credit cards, mark this down on your checklist.
- Divide your debts into joint and individual: If your spouse brought debt into the marriage, such as student loans or a personal loan, you can argue that you shouldn’t be responsible for it post-divorce. However, joint debts, such as joint credit cards and bank accounts, require division.
If you don’t prepare to divide debts in a divorce, you’ll find yourself playing from behind as you move through the process.
Just the same as your assets, you must know your debts inside and out, as this will help protect your legal rights in divorce. You want to protect against a situation in which you take on debts that you’re not responsible for. Neglecting to do so will have a negative effect on your post-divorce financial life.