Tuesday, May 15, 2012

Guest Post by Jennifer Smith: Dividing Up Debt

Dividing Up Debt

There is nothing simple or easy about divorce. In addition to coping the emotional distress associated with the end of a marriage, you also must contend with dividing up your marital assets as well as your marital debts. Most married couples do carry several different types of debts, including car loans, home loans, student loans, credit cards and more. Some of these debts may be your obligation to pay alone. Others may be divided up between you and your ex. 

Reduce and Divide Debts 

It is important to work with your attorney as well as an accountant regarding personal finance matters. Your attorney can help you to determine which debts you are legally responsible for and which debts you and your ex will need to divide up. You certainly do not want to take on more debt than is necessary, as it may take you several years to pay off significant debts. Keep in mind that as marital assets are sold, such as a home that you both shared, the profits from the sale can be used to reduce or eliminate some debts entirely. 

Hire Professional Assistance 

Divorce can be tricky, as there are numerous factors to consider that you may not be aware of. When you hire a lawyer and hire an accountant to help you through this process, you can more certainly make wise and informed decisions that are right for you. A lawyer as well as an accountant can work on your behalf to ensure that you only take on debts that you are legally obligated to. Further, an accountant can advise you about the most advantageous debts to take on when given a choice. 

Close Joint Accounts 

Many divorced adults have attempted to divide credit card debt by assigning one person to one account and another person to another. This is easily done, as you simply have to change the mailing address for the payment. However, ultimately, as long as a joint account is still open, you are still financially responsible for that payment. Some divorced adults have had the rather unpleasant surprise of finding out that their ex hasn't been making payments on that account they are both legally tied to. 

To avoid such an unpleasant surprise, it is best to close joint accounts. You can research the best credit cards to have and open a new account in your name. Then, you can transfer your portion of your debts onto this new account. Advise your ex to do the same, then close the joint accounts. This provides you with a fast route to a clean financial break from your ex. Because this debt can be expensive to manage on your single income, it is important to shop for the lowest interest rate and best credit card terms available. This can reduce the expense of your credit card payments on your budget. 

Personal finance during and after a divorce is not easy. You have to contend with establishing yourself as a separate entity from your spouse financially, and you also have to establish a budget that is affordable for you. This can take time and effort, but ultimately you will be better off by making this effort.

 

For more writing by Jenna you can check out paidtwice.com.

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Comments

A lot of practical advice being shared here. It's good to see practical advice being posted on a blog like this one operated by scholars.

Posted by: Tulsa Divorce Attorneys | May 16, 2012 7:08:16 AM

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