A 2013 study conducted by Kansas State University revealed that financial problems early in marriage are the most significant predictor of divorce.
So, it is no surprise that newly singles encounter financial difficulty when two people decide to split. Whether you were already in debt previously or trying to avoid the monsoon of financial struggles, here are some practical tips to keep in mind as you work to rebuild your life.
Tally it Up
No matter how much debt you are in or you and your spouse share, make sure you add to take the time to add it all up, including auto loans, mortgages, student loans, and credit cards. You should know whose name everything is in and every debt amount. Don’t leave any stone unturned. Even if there are debts your former spouse may be unaware of, take your debt and split it into two lists:
Work Out which Debts You Should Pay First
If you don’t have enough money to keep up the payments on your bills, loans, credit cards, or mortgage, it’s critical to prioritize what you can pay and what loans are most vital to your well-being. Your most essential debts are usually your mortgage/rent and electricity bill. To ensure that you have a roof over your head and lights on in your house, make sure you pay these bills before anything else. If you can’t make these payments, consider a temporary roommate to share the costs, re-entering the workforce, or picking up a second job until you get on your feet again.
Sort Out Secondary Debt
Once you have made arrangements for your priority debts, you should determine how much you can pay towards the money you owe on bank loans and credit cards. If you can’t make the minimum payments, contact your lender and tell them what you can afford. You may be able to restructure your loans based on your current financial situation. If you prefer to work out your credits with a debt professional, find out if you can freeze interest while you work out a repayment plan.
Joint Debts – What to do?
If you have joint debts with your former spouse, such as a mortgage, bank loan, or credit card, you are liable to pay the amount in full. If your ex doesn’t pay their share, you are still responsible for the payments. Contact your lenders, inform them of the separation, and request:
Once you have put measures in place to prevent further damages, try to arrange with your ex-spouse. To protect your credit scores, divide the debt into what is fair, refinance wherever possible, payoff, and consolidate. You may require a mediation service to get agreements in writing.
Don’t Think You’re Off the Hook
When it comes to marital debt, you’re always responsible if it remains in your name – even if your previous partner has agreed to pay it after the divorce. If your ex stops making payments even years later, your creditors will hold you equally responsible for the debt owed. Working together after a divorce is challenging but essential to both parties’ financial well-being.
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