What You Need to Know About Debt and Divorce


You might be surprised to hear that 40% to 50% of all marriages end in divorce. There are a number of different reasons why couples may divorce, but one of the biggest and most common reasons is because of financial troubles.

If you are in this unfortunate situation, you may have a number of questions about what happens to debt after a marriage dissolves. The ideal is actually to resolve all debt-related issues before the divorce, and this may involve bringing in professional help to settle your debt if necessary.

But unfortunately not all divorces can be settled so cleanly, and there may even be disputes about what to do about the debt. Here are answers to some questions that you may have about divorce and debt.

Who is responsible for the debt?

If there has been no resolution before the divorce, then it’s up to the courts to decide who will pay off the debt. In some cases, they may decide to split the debt between the two spouses. This can even apply to individual debts.

It’s important to know, though, that in a creditor’s eyes it only matters whose name the money was borrowed under. In their eyes, this person is the one responsible for paying off the debt, and if they don’t, their credit rating and credit score will be affected.

What should I do about our credit cards?

If your spouse is a secondary credit cardholder, then be sure to remove them from the account that way they can no longer use your card. Remember that you are responsible in the creditor’s eyes for whatever you owe.

If you have a joint credit card, freeze the account so that no more charges can be made and only payments will be accepted. Keep up with the payments so until the courts settle who pays what and be sure to seek out legal advice.

What if I’m the only one making payments?

If you’re stuck with making all the payments keep a record of everything and discuss legal action with your lawyer. While unfortunate, you should continue to make payments to avoid any unwanted consequences.

Am I responsible for debt I wasn’t aware of until after the divorce?

To avoid this situation altogether, each spouse should pull their credit reports and share it with one another. That way everything is on the table and you can settle it together.

If this doesn’t happen, it is another situation that will have to be resolved in court, though it will definitely be messy.

What happens to our secured debts during a divorce?

A secured debt is something like a mortgage or a vehicle loan where an asset is attached to it. If on friendly terms, both spouses should sell their home and split the money, otherwise, one could try to buy out the other. In the case of a vehicle loan, you can ask the lender to refinance under only one of the spouse’s names.

Don’t Go it Alone

It’s highly recommended that before getting a divorce that the two people involved seek debt counselling. Even if only one of you is willing to do it, it’s worth it in order to get some useful advice.