How Can I Handle Joint Debts During a Divorce?
A major part of the divorce process is logistically separating your and your soon-to-be former spouse’s expenses. You may easily claim your separate assets and take responsibility for your separate debts. But the elephant in the room, so to speak, will be the joint debts that you collected throughout your marriage. You may not want to continue relying on one another to pay off these debts once your divorce is finalized, so you may want to figure out how to resolve them now. For this, please follow along to find out how to handle joint debts in your divorce proceedings and how one of the proficient Somerset divorce lawyers at the Law Offices of Kisha M. Hebbon, LLC can help ensure your financial protection during this challenging time.
How can my spouse and I handle joint debts during our divorce?
If possible, you and your spouse should remain amicable so that you may negotiate your joint debts in mediation proceedings. Here, you may work together to pay off as much of your joint debt as possible now. This may be done by agreeing to liquidate some of your marital assets to generate enough funds to pay them off. You may also sacrifice some of your disposable income to resolve the last of it.
In this way, you may close all your existing joint accounts. But if you still have outstanding joint debts, you may settle who should become solely responsible for which debts. This is so you may convert your joint accounts to individual accounts and designate the debts accordingly. With this new individual account, you may want to ask your lenders for modified repayment plans that account for having one income source now rather than two.
How else can I protect myself financially during a divorce?
Unfortunately, it is almost inevitable that your credit score will take a hit during your divorce, even if you are negotiating debts fairly with your spouse. This is because, through this process, you may have to close your joint credit cards and bank accounts. This may reduce your credit history’s length. Then, when making some of these debts your sole financial responsibility, you may have to apply for new loans if your existing lender is unwilling to renegotiate a payment plan. Overall, a reduced credit history, additional loans, and more may lower your credit score.
With that being said, below are a few tips to help you build up your credit score in the aftermath of your divorce case:
- Ask your spouse if less debt can be assigned to you to avoid late or missed monthly payments.
- Monitor your credit report frequently to confirm exactly what debts you are financially responsible for.
- Create a monthly budget to ensure your credit utilization ratio is less than 30 percent every monthly billing cycle.
- Apply for credit cards in your name to establish a history of consistent, on-time monthly payments.
Before you take any further initiative with your divorce, we urge you to consult one of the talented Somerset County family lawyers. Most definitely, the team at the Law Offices of Kisha M. Hebbon, LLC is eager to work with you.
