How to Manage Credit Card Debt During a Divorce

divorce and money

Divorce is complicated. When it comes to divvying out debt, even the most amicably separated couple can find themselves at odds. In New Jersey, you are responsible for any debt in your name—even if your spouse is the one who racked up the bill. It’s easy to become overwhelmed and end up spending buckets of money either paying off your ex’s debts or facing a pile of legal fees. To avoid making a complex situation any more confusing, here are some great money-saving tips for dealing with credit card debt during a divorce.

Deal With Debt Before Divorce

If you’re already facing credit card debt, it could be financially disastrous to add the high cost of divorce to your financial woes. While it may be difficult, your best option is to deal with the debt before you file for divorce. As tempting as it may be to wait for a court to figure out how to divide the debt evenly, you and your spouse will save a lot of money coming to an agreement on your own.

Meet up and discuss exactly what the two of you owe. If you both have your own credit cards, remove the other person as an authorized user from those accounts. Even if you are just an authorized user on an account, your credit can be impacted if your former spouse does not make on-time payments. If you have joint accounts, consider transferring the balance to new cards that you each take out separately. Look for balance transfer credit cards with low interest rates. If you can compromise with your spouse in how to divide the debt evenly, you could save hundreds or thousands of dollars in legal fees.

If You End Up Paying Your Ex’s Debt

Unfortunately, some people don’t have the chance to be proactive about marital debt before a divorce because they only find out about the debt after the fact. If your name is attached to the account the debt is under, you may have no choice but to take responsibility for the debt. You can take steps to getting your name removed from the account, but in the mean time, you will need to make sure the account is getting paid.

In order to protect your credit, you may be stuck paying off debt accrued by your ex. It is important to note that while you can petition the court to have your spouse repay you for these debts, this path is expensive and you may never get the money back—even if you have a court order. This is why it is very important to make sure you and your ex do not share any accounts at the time you file for divorce.

If your ex does not remove your name from an account willingly, you will need to get a lawyer to prove you did not know about the account and did not benefit from the loan. If you do end up being responsible for paying off a portion of this debt, kept diligent records of your payments. If your ex decides not to pay their part, you will be able to prove that you have a history of making good on your payments.

Work on Creating Good Credit Post-Divorce

Whether you are facing the arduous task of building your credit from scratch or working on paying off debts accumulated in your marriage and subsequent divorce, you will need to generate a solid plan to rebuild your finances. Create a list of your debts to determine how much money you can afford to put towards each debt every month. Your new budget will need to absorb living expenses as well as any debt you are responsible for after the divorce.

It can be difficult to adjust to life under one income instead of two—especially if you are struggling under the weight of credit card debt. Veitengruber Law’s experienced financial legal team can help you come up with comprehensive debt-relief solutions catered to your specific needs. Managing debt during and after a divorce can be complicated and stressful, but you don’t have to do it alone. We can help you make a plan to eliminate burdensome debt so that you can start to move toward financial health.

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