How A Divorce Affects The Debt That You Took Jointly With Your Spouse

By Monica Gill

August 30, 2018   •   Fact checked by Dumb Little Man

joint debt after separation

Divorce is a long and emotionally difficult process. You’ll be making hard decisions about your house, children, and the debt you incurred while you were a couple.
Separating your emotions and finances from your soon-to-be-ex is a complicated procedure. It’s important not to assume anything when it comes to handling joint debt after separation.

You must take the necessary steps to protect your assets and finances. The faster you get out of joint debt, the better.

We’re talking about everything from what qualifies as joint debt and how to use quick loans to your advantage. Here is everything you need to know about what happens to debt when you get divorced.

What is Joint Debt?

joint debt

Put simply, joint debt is a debt you have accrued with your spouse. This can take on various forms, such as an overdraft or joint bank loan.

One of the most common joint debts is a marital home. As long as both of your names are on the mortgage, both of you are responsible for repaying it. The same applies to car loans and joint credit cards.

You will be equally responsible for the entire sum of debt incurred and not just half. What you are not responsible for is any debt that your partner incurred before you were legally married. You are only liable for debts that have been co-signed.

What Happens to Shared Debt During a Divorce?

Statistics show that those under the age of 35 owe an average of $67,400. Those between the ages of 35 to 44 owe $133,100. This is a hefty sum to try and separate for couples on the verge of divorce.

Upon filing for divorce, you may expect your debt to be split in half by your lender or creditor, but this is not going to be the case. By law, both during and after divorce, you and your ex-spouse are still legally responsible for the entirety of your shared debts.

Draw up a Separation Agreement

separation agreement

You and your ex-partner are liable for paying off your joint loans/debts. As long as both your names are still attached to your debts, they will continue to affect your credit. This can negatively impact your ability to borrow money in the future.

For this reason, it is wise to draw up a financial separation agreement.

Meet with your partner and verbally agree to continue making payments on your debts. You may also choose to draw up a legal document at the bank and have it witnessed and signed for extra protection.

Options for paying off shared debts include:

  • Keeping a shared account which both parties deposit money into for paying off mutual debts.
  • Agree that one person will pay off the debt, but receives a contribution from the other person.
  • Take out a quick loan to pay off the debt in its entirety so that you can get your names off the existing loan as soon as possible.
  • Keep your bank and lawyer informed if your ex-spouse defaults on payments or simply won’t cooperate on a repayment plan.

Take Steps to Protect Your Credit

Even if you and your ex-spouse have signed a separation agreement, you should still ensure you’ve taken steps to protect your finances during and post-divorce.

You may trust your ex-partner to hold up their end of the agreement, but the truth is he or she could go bankrupt at any moment and leave you solely responsible for the entire sum of debt left behind.

If possible, try and include an indemnity clause in your divorce settlement. This is a sum of money paid in compensation for loss, such as in the case of your ex-spouse not paying up.

Remove Yourself from Joint Loans

As previously mentioned, the sooner you can get your name off of a joint debt, the better!

The last thing you want is to have your financial future in the hands of your ex-partner. One way you can do this is by refinancing your secured loans.

For example, if your spouse is the one keeping the marital home or vehicle, have the loan refinanced under his or her name only. This removes you from any responsibility in helping to pay off the debt.

Getting a New Loan

Another option for getting rid of debt quickly is to apply for a quick loan.

A quick loan can be a life-saver for dire divorce situations. A quick loan company can help you get a loan and improve bad credit all at once. You will be given an estimate of how much you can borrow, the amount you will repay, and its duration.

Keep Your Eyes Open

Divorce is a messy matter. When it comes to managing debt and protecting your finances post-divorce, you should always keep your eyes open. This is true even if you believe your ex-spouse to be a trustworthy, responsible person. Take proactive steps to relieve yourself of shared debt.

Taking Legal Action

There is always the option of taking your ex-spouse back to court if they are making it difficult to take care of your joint debts. If possible, try and refinance or apply for a quick loan before going this route. Going back to court is a costly option.

As if divorce weren’t messy and complicated enough, now you have to deal with your shared financial situation. Don’t assume anything. Plan ahead and take positive steps to protect your credit after your divorce. Look into quick loans to help you pay off shared debt until you can get your bank involved.

Monica Gill

This article was written on behalf of

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