Although the national economy has experienced significant recovery since the end of the recession, residents of Georgia have not experienced such relief, with persistently high rates of unemployment and foreclosure. Even if that were not the case, it would probably be difficult to find a couple in Georgia that has not accrued some sort of debt, whether from credit cards, or from a mortgage, car or student loans.
So what happens if a couple that has significant debt decides to divorce? Here are a few tips from a certified financial planner on how divorcing couples should handle debt.
First, you should make every effort to pay off all joint debts prior to divorce, and then close their joint accounts. This is especially true for credit cards. If this is not possible, the debt will be divided between the spouses in the divorce decree.
If that happens, both spouses should attempt to transfer the debt into an account under their name only. This will protect each person’s credit rating should the other fail to make the required payments. In addition, credit card companies will often seek payment from both spouses if one fails to pay the bill, so taking your name off of the debt will protect you from having to make payments on that debt.
If you don’t trust your spouse to make payments, check your credit report frequently. And as soon as a debt is paid off, close that account.
Finally, if you feel that bankruptcy is the better option for both of you, you should file as a couple before you file for divorce. This will allow both of you to start your post-divorce life debt-free.
Source: KDVR, “How to protect your credit in divorce,” Nancy Melear, April 4, 2012