How to Remove Debt After a Divorce
Divorce takes a huge toll on those involved -- both emotionally and financially. Often times, there can be a lot of debt to separate after a divorce. If you and your spouse shared credit card accounts or mortgages, you will have to divide the debt responsibility and formulate a plan to remove the debt after your divorce. Debt removal is an especially difficult task after a divorce because your income is split in half and you will have to find alternative housing.
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Instructions
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Obtain a copy of your credit report from one of the major credit reporting bureaus so you can determine all the open accounts.
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Work with your ex or your divorce judge to establish an agreement about who will be responsible for each portion of debt.
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3
Close all joint credit card accounts and other forms of credit and open an account in your own name. The companies might not let you close an account if a balance is owed, but you have the option to freeze the account to prevent your spouse from charging additional expenses.
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Remove your name from any debts that your spouse has agreed to pay so that you won't be penalized if he fails to pay. Write a letter to inform each company of your divorce and make it clear that you won't be responsible for any debts incurred after the date of your letter.
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Evaluate the amount of debt that you owe in relation to the amount of income you earn. You may need to get a second job or create a budget plan that will allow you to pay your living expenses and pay down your debt.
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Consolidate your debts so that you only have to make one payment to one company each month. Debt consolidation companies will pay off your debt, so that you are then responsible to the consolidation company.
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7
Scale down your lifestyle to reduce as many expenses as possible. This means living in a smaller house, driving less expensive cars and reducing frivolous spending.
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Tips & Warnings
Selling your home and splitting the value will leave both spouses with money to pay down debts.
Never trust your spouse enough to leave your name on joint credit lines because you might end up with an even greater amount of debt.
References
- Photo Credit ring image by Jens Klingebiel from Fotolia.com
