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Divorce and Debt: Navigating Responsibilities and Protecting Your Financial Future


A couple assessing their debts before divorce
How Debt Is Split Up During Divorce Can Have A Lasting Impact On Your Future

The reality of divorce is that you're navigating what can be a complex landscape of financial issues that need to be addressed when separating assets.


Dealing with obligations like debt can be an unwelcome task on your to-do list, but it's important to tackle it head on so you know what your financial realities will be moving forward.


At The Divorce Planner, our goal is to help you take your next steps informed and ready. Our expertise and a forward-looking perspective will benefit you as you make impactful decisions about who gets what during divorce negotiations.


The Emotional Weight of Debt


A graphic that says Money Equals Feelings
Financial Discussions Can Prompt BIG Emotions

Debt, in its various forms—be it from student loans, credit cards, or personal loans—carries more than just a financial burden; it’s wrapped in emotions. Understanding this, it's important to approach the subject not just with financial preparation but with sensitivity and understanding.


If you've got a lot of personal or marital debts, the biggest thing you need to keep in mind is that you're not alone. A recent study by the credit company Experian found that 340 million Americans are carrying some type of debt. Hopefully this statistic makes you realize that many people are in a similar situation.


Acknowledge if you're feeling stressed out, shame, or anger about having debt and take steps to deal with those feelings in a constructive way. You'll find lots of helpful self-care resources and ideas in this section of The Divorce Planner blog.


Acknowledging Your Situation: The First Step to Taking Control


The first step towards managing your financial situation during a divorce is acknowledging the full scope of your shared and individual debts. Knowledge is power—understanding what you owe, regardless of whom debt belongs to, gives you a solid foundation upon which to build your strategy.


Spoiler Alert! Not all debt is created equal in the eyes of the law.

Distinguishing Between 'Yours', 'Mine', and 'Ours'


Generally, debts incurred by either partner during the marriage are considered marital debt and are subject to division during divorce proceedings. However, debts brought into the marriage are typically considered separate and remain the responsibility of the individual who incurred them.


Navigating these distinctions requires a clear understanding of your financial picture. This is where cataloging all debts, their origins, and who benefited from them becomes crucial.Having a clear understanding of what you have and what you owe will immediately give you an overview of what you'll need to tackle.


For a deeper dive into assets and how to protect them, check out the post 7 Ways To Protect Your Assets During Divorce. It offers essential guidance in navigating this complex process so you are on top of everything necessary to address and equitably split during divorce negotiations. Key advice includes the critical first step of cataloging your assets to understand what you own and its value. This lays the groundwork for fair negotiations and protects your interests. The post also underscores the importance of getting organized, from gathering necessary documents to understanding the value of tangible assets.


Protecting Yourself and Your Financial Future


Equipped with knowledge, the next step is to protect yourself from unknowingly assuming your spouse's debt. Here’s how you can begin to safeguard your financial well-being:


Be Proactive: Understanding and Documenting Your Debts


Gather all statements and documentation related to your debts and begin sorting them into what you may deem as "yours", "mine", and "ours." This exercise isn’t just about legal division; it’s about gaining a comprehensive overview of what your financial future might look like.


  1. Engage with Experts Consulting with a divorce prep coach or a financial planner early on can provide you with strategies tailored to your unique situation. These professionals can offer insights into how different types of debt are likely to be treated in your jurisdiction and help you develop a plan to address them equitably.

  2. Consider Mediation for Debt Agreement In some cases, coming to an agreement about debt outside of the court can save both parties time and distress. Mediation can offer a platform for you and your spouse to discuss and evenly distribute the responsibility for marital debts, with the guidance of an impartial third party.

  3. Get A Copy Of Your Credit Report ASAP Understanding the full picture of your financial health is an important step, and securing a copy of your credit report is a cornerstone of this process. You have the right to access a FREE copy of your credit report annually from each of the three major credit bureaus, and through visiting the site AnnualCreditReport.com.


Found Out Your Spouse Has Taken Out Credit Cards In Your Name? Do This ASAP!


Discovering that a spouse has taken out credit cards in your name without your permission is deeply unsettling. While it's not common, it does happen. It's an enormous breach of trust that can have far reaching negative financial repercussions.


Here are a few actions to take ASAP:


  1. Documents the activity and talk to a local family law attorney ASAP. Bring as much information to your consultation as possible, including banking institutions where the accounts are, any statements you can access, and details on when the account in question was opened.

  2. Report the identity fraud to the Federal Trade Commission (FTC). You can fill out a simple online form or make a call to 877-438-4338 to formally document the fraudulent activity. The FTC also advises taking the additional step of filing a police report with your local authorities, adding an extra layer of official documentation that can significantly assist in resolving the fraud.


Charting Your Path Forward


Embarking on the divorce process with a clear understanding of your financial situation, particularly with debts, is paramount. It empowers you to make informed decisions, negotiate from a place of strength, and lay the groundwork for a stable financial future.


With the right preparation, resources, and guidance, the journey through divorce and debt management can lead to a future where you thrive, financially and emotionally. It's critical to equip yourself with the knowledge and tools to take control of your financial future. The Divorce Planner is here to help pave an easier way, providing the resources, support, and expert guidance you need at every step.


Tools and Courses: Your Allies in Financial Preparation


At The Divorce Planner, we believe in empowering you with the tools and knowledge you need to face these challenges head-on. Our Digital Tools and Financial Planning Guides are designed to help you catalog your assets and debts, understand your financial obligations, and develop a proactive approach to debt management. That, and they help you tackle all of the emotional triggers that come up when dealing with financial stressors.


For those looking for a deeper dive, our comprehensive Divorce Prep & Financial Planning Course provide step-by-step strategies for financial preparation before, during, and after your divorce. These resources are not just about surviving the present; they’re about thriving in the future. All that, and you'll save time and money moving forward.





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