As you inch closer to divorce, it's natural to turn your attention to your assets and debts. You want to know what will happen to these things during your divorce, and it's important to have a clear idea as soon as possible.
Many people focus all their energy on property division, such as who gets the family home and what happens to their retirement accounts. While these things are important, you don't want to overlook the many types of debt that you may carry together.
Here are some key points to keep in mind:
- Your legal liability for debt: Simply put, you need to know if you are on the hook for a particular debt. For example, if you have a joint credit card with your soon-to-be ex-spouse, you're both responsible for any balance.
- You can solve this problem before you divorce: You don't have to work through your debt in divorce but can instead handle some or all of this before pushing forward. For example, if you have joint credit card balances, use a balance transfer so each individual takes on their portion.
- Beware of future debt: Once you decide to divorce, it's a good idea to close down all joint accounts. Neglecting to do so leaves you open to the other person incurring debt without your permission.
With so much going on during your divorce, you may find it difficult to make a list of your debts and decide how to deal with each one. As challenging as it may be, you must understand your options and what will work best for you and your finances.