Pay All Common Debts Before Divorce

If you want to be financially free and clear after a divorce, it can't be emphasized enough how important it is to take care of and resolve all of your debt obligations before the divorce is finalized. There no worse feeling than going to apply for credit to buy a car or house and to find out that your former partner's debts are still listed on your credit report and is preventing you from getting a loan.

A good way to begin is to collect all of the family's household expenses and debts in one place and begin the process of documenting them. It's important that both partners be involved. In the cases where it is one person who is mainly responsible for keeping track of the finances, it's entirely possible that the other person has no idea of the amount of debt that is involved. If you've kept a budget, this will be a lot easier. The easiest way to do this is to enter all of your debt obligations into a simple spreadsheet. This includes ongoing daily/weekly expenses such as food, rent, travel, etc. On a separate sheet list your long term debts – such as mortgages, home equity debts, home repair loans, and so on.

If possible, all debts should be paid before the divorce is final. If this is not possible, a fair solution is for one person to take responsibility for a greater share of the debt in return for receiving a greater share of the assets. Contrary to what most people think, arrangements of this sort can usually be achieved without a great deal of animosity. Start the process of disentangling your joint finances immediately. Cancel all joint credit cards as well as other joint loans as soon as possible.

The crucial point is that when all of the papers have been filed and the divorce is finally complete, that each partner has a list of debts for which he or she is exclusively responsible for and that neither spouse is responsible for any of the other partner's debts.

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