Everyone knows that divorce is expensive. After the divorce is over, however, you also have to cope with the fact that your total household income is going to be reduced without your spouse’s contributions.
The wise (wo)man in this situation will start to consider what to do about the marital debt before the divorce actually gets filed. While everyone’s situation is a little different, here’s what you should do about your debt before you actually divorce:
1. Run credit reports to check your debts.
This is the best way to get a grip on all the household debts (including any that may have been hidden or simply forgotten). Make sure that you order reports from all three credit bureaus so that nothing is overlooked. Medical bills, in particular, can easily be overlooked due to the time it can take to process them through the insurance.
2. Discuss a debt-resolution plan with your spouse.
If you can, it’s usually better to pay off the debts right away. Remember: Even if your spouse assumes half of the debt in the divorce, there’s no guarantee that he or she will actually pay it. That could leave you on the hook and negatively affect your credit no matter what your divorce papers say.
3. Consider selling assets to pay off the debt.
If you don’t have the cash available to pay off your debts, consider liquidating your largest assets in order to pay everything off. Usually, that means selling the house, the boat and other recreational vehicles (if you have them). While this will leave you with fewer assets, it can also leave you with a fairly clean financial slate. That could put you on good footing after your divorce is over.
There are a number of complex financial issues that may need to be addressed during your divorce, but dealing with the debt early on can help you overcome other major hurdles with ease.