The question of what to do with your debt may become one of the more complicated aspects of your divorce. Over the course of your marriage, you and your spouse have accumulated debt together in a number of ways, likely with credit cards but also through loans and perhaps your mortgage. The problem with debt is that you remain on the hook for your share of it even after you have finalized your divorce.
Debt is one of those issues that you should think about in advance of your divorce. Resolving at least some of your marital debt could reduce the intensity of the issue during your divorce, plus it could help your financial situation once your divorce is complete. Bankrate describes some possible methods to deal with debt prior to divorcing.
Pay down debt
One option is to pay down whatever marital debt you can before you go into divorce proceedings. This may work out if you have enough assets left over after you divorce to start a new life. Otherwise, you may spend yourself into such a financially precarious state that paying off debt will probably not be worth it.
Some couples consolidate their debts. This involves combining your debt payments into a single payment per month. This may benefit you if it allows you to pay your debts at a lower interest rate than before. Also, debt consolidation might give you emotional relief since you are not dividing your attention across multiple payments each month.
Another option is to negotiate with your creditors for lower interest rates, delayed payments or reduced payments. Some people hire a debt settlement company to negotiate on their behalf. This is a choice to take with caution since not all debt settlement companies are legitimate, plus not all debt settlement negotiations ultimately succeed.
Reduce your obligations
If paying down your debt is not an option, you could try to reduce your obligations by removing yourself from joint credit cards or other debts. This may not be easy since some creditors prefer two incomes on their accounts, so it could help to start early. Also be aware of debts you have co-signed. You will be responsible for those debts if your name remains on them.
The choices you will make must reflect your personal interests and your current circumstances. Fortunately, there are a variety of options to explore, and you may find one or two that will be of assistance at a difficult time in your life.