In our last post, we talked about an important financial topic when a divorce occurs. If either spouse is a business owner, then there are substantial stakes to their split. This is just one of many possible financial topics that could be involved in any given divorce. Every case is unique, and there are a lot of potential issues in any given case.
With that said, we would like to address debt in a divorce. More specifically, we would like to address the situation where married spouses have a joint account and then decide to divorce. In such a scenario, the divorcing spouses need to pay back their creditors and close the account as soon as they can.
Now, you may be asking yourself “why should they do that?” Consider this hypothetical (but for many people, all too real) situation:
- A married couple has a joint credit account, and after years of using it, they have always responsibly handled the account. However, they are now getting a divorce. In the weeks leading up to the divorce, they both used the account to pay for everyday costs.
- The costs end up being significant, and with the divorce happening, neither spouse pays their creditors. The divorce proceeds. In the agreement, it is determined that one spouse will handle the debt.
- Weeks and weeks pass, and the debt goes unpaid. Now both (former) spouses are noticing their credit scores declining and they are both being called by creditors looking to collect.
This happens too often, and couples that are going through a divorce should prioritize clearing out their debt to make it easier for everyone in the long run.
Source: FindLaw, “Credit and Divorce,” Accessed Sept. 22, 2016