As you go through the process of getting divorced, you and your spouse will need to agree on how to handle debt and finances. Although debt may have been part of the marriage, it’s best to try and pay it off before or during the divorce. This can be difficult, but it’s usually the best scenario. So what happens to debt in divorce?
After a divorce, you and your former spouse will need to figure out how to divide up all of the financial assets and liabilities that you built up during your marriage. This can be a complicated process, but there are some key steps that you can take to make it go more smoothly. Here are some things to keep in mind as you go through this process.
Make a List for All Your Debt in Divorce
To get a handle on your finances, it is crucial to understand what debts you have.
- Mortgage
- Credit cards
- Auto loans
- Student loans
- Personal loans
- Legal fees
- Tax debt
- Any other debts, including loans from family members
Determine Responsibility

Debts can be tough to keep track of, especially when it comes to shared expenses between people. Oftentimes, student loan debt is shouldered by the student alone, while an auto loan might become the responsibility of whoever owns the car.
With the current state of the economy, many people are struggling with debt. One type of debt that can be particularly difficult to manage is credit card debt. This is especially true for families who often use one card for expenses for the entire household. In some cases, the division of these debts may be a key financial issue during a divorce.
In most cases, married couples are jointly responsible for any debts incurred during the marriage. This is usually the case when both spouses are co-signers on credit cards. In community property states, both spouses are typically responsible for debts incurred by either partner.
Set a Deadline

Having debt can make life very difficult and stressful. Dividing up debt can be an even bigger challenge, especially when the balances continue to grow. To make things easier on yourself, set a date after which there will be no new joint debt. This way, you can keep track of each person’s debts as of that date and move forward from there.
Once you’re no longer together, the debt from credit cards becomes the responsibility of the spouse who made the purchases. To avoid any conflict, it’s best to use separate cards.
It’s a good idea to close any joint credit card accounts you have with your ex-spouse. That way, you won’t have to worry about them racking up debt in your name. Once you’re separated, open up a new credit card for yourself and use it for your expenses. This will help keep your non-marital debt separate from the debts you accumulated while you were still married.
You and your spouse should close any joint accounts that you have together. This will not end your liability for debts incurred up to that point, but it will protect you from being responsible for any new debts that your spouse might incur. You should also revoke any authorization that your spouse has on any accounts in your name. Keep detailed records of all of your charges so that you can prove what is yours and what is not.
It is important to continue making minimum payments on credit card accounts, regardless of any disagreements about responsibility for the debt. Failure to do so could damage your credit score and hurt your credit history in the future.
Make a Plan to Pay Your Debt in Divorce

Some ways to get rid of joint credit card debt are by handling it or eliminating it.
- Agree to transfer portions of joint debt onto individual cards and cancel the joint cards.
- Agree to use joint savings to pay off all or a portion of the debt.
- Agree to sell a car or other asset and use the money to pay off outstanding debts.
- Agree to use a home equity line of credit in a jointly owned house.
In some cases, when divorcing, each party may agree to take on certain debts to keep an asset, such as a car or another valuable item. This is known as an equalization payment and can be part of the divorce settlement.
When you are buried in debt, it can feel like there is no way out. Bankruptcy may be worth considering in this case. Filing for bankruptcy together with your spouse can help to protect both of you from joint debt. Additionally, filing for bankruptcy will not affect any payments for child or spousal support.
Protect Yourself

As you begin the process of getting a divorce, it’s important to take a close look at your finances and make sure that you are prepared for the future. One important step in doing this is to obtain a copy of your credit report.
By comparing your list of debts with your official credit report, you can avoid any surprises down the road. It’s also important to make sure that any debts not paid off in full are assigned to one spouse or the other. This way, after the divorce is final, you won’t be liable for any outstanding debt that your ex may fail to pay.
Ideally, you’ll want to leave your marriage with no joint debt. You can do this by paying off joint credit cards together or by dividing up the debt on joint cards and transferring it to cards with individual names.
Developing a plan to get rid of debt may involve making some tough decisions. However, it must be done to move forward.