Many marriages end due to disagreements or stress over money. Perhaps one spouse wants to live modestly while saving for retirement, while the other is comfortable living paycheck to paycheck or even amassing sizable amounts of credit card debt.
This difference can make divorces even more complicated, but the smart move is to pay off all or most of the debt before beginning divorce proceedings.
Protecting one’s finances
The fiscally responsible spouse can go further by preventing the spending spouse from putting them back in debt. Here are some straightforward ideas for protecting finances and credit ratings.
- Close joint accounts: Closing joint accounts (or accounts they have access to) is a smart way to avoid them running up debt. A spouse may ask the creditor to convert them into individual accounts, but they do not have to do it (and may still hold both spouses responsible for debt).
- Divide and transfer credit card balances: Transfer that joint debt to new individual credit cards (ideally with low initial interest rates) and cancel the credit cards.
- Get annual credit scores: This can give an accurate picture of a spouse’s spending and whether they are behind on their repayments.
- Include an indemnity clause: Get it in writing if one spouse is responsible for a debt as part of a divorce agreement. An ex-spouse can file a lawsuit if the spouse with the clause does not pay the debt.
Any divorce decree by a judge does not change that both spouses are responsible for the joint debt. If a spouse misses payments, creditors of a joint debt can legally come after the ex-husband or wife even if they already paid their agreed-upon portion.
Planning can help
It can be frustrating that money problems can follow a spouse after a divorce, but careful planning and responsible spending can resolve it. Once the marital debt is gone using these strategies, a spouse is truly free to move forward with one less burden.
