Debt and Divorce
When we think about the financial side of divorce, things like alimony and child support come to mind. But, divorce and financial expert Donna M. Cheswick reminds us of another important money matter – debt.
Here’s what Donna has to say:
Complications with Joint Debt after Divorce:
There are times when one spouse will be assigned all or a portion of joint debt as a result of divorce.
Unfortunately, the company that issued the original loan could care less what has been agreed to in court. They see the loan as a legal obligation of both parties and will enforce the debt obligation from either owner on the account regardless of marital status.
So if your ex fails to make monthly payments, or worse yet, files for bankruptcy your creditors can, and will, go after you for the full amount of the debt including interest and penalties.
That is why it is critical to try to pay off all joint debt prior to, or at the time of divorce using joint assets. If this is not possible, then dividing up the debt and having each spouse refinance into their single name would be advised so that each party will be solely responsible for any debt that lingers on.
Written By: Donna M. Cheswick, Certified Divorce Financial Analyst, www.bpuinvestments.com