If you and your spouse are waiting until you’re in a good place financially to get a divorce, you could find yourself together for many more unhappy years. Many couples divorce while they’re on a tight budget and in a fair amount of debt.
You just have to be prepared to deal with your debt both during and after the divorce. Let’s look at some of the common sources of debt and some ways to handle those as you and your spouse separate your lives and your finances.
Determine what to do with large shared assets
Your largest asset is probably your home. If you have equity in it, your best bet is likely to sell it and split the proceeds. You’ll want to discuss this with your attorney and maybe a real estate professional.
If you have other valuable assets, like perhaps a boat or a vacation cabin, it may be best to sell those and put those funds toward your debt. This can also be wise if you can’t agree on who should keep them.
Paying off debts
For anyone tackling credit card debt, the best advice is typically to pay off the cards with the highest interest rates first and work your way down. If you have car loans in both of your names, you may want to refinance them so they’re only in the name of the person keeping each vehicle. Of course, if you can pay them off, that’s even better.
Remember that any loans, credit cards or other lines of credit in both of your names are the responsibility of both spouses unless you change the ownership. You may want to change their ownership as you divide your debt. Remember that even if your spouse promises to pay off a couple of your cards, if your name is on them, the card issuer can come after you if your spouse fails to make the payments.
If debt is a big part of your financial picture, as it is for many couples, be sure to discuss each item with your family law attorney. They can help you work to ensure you’re not saddled with more debt than you can or should have to pay off. Remember that a good credit rating is going to be more important than ever after your divorce.