Shared debt for things like your mortgage, a car loan, and even credit card bills is a given during marriage but dividing that debt in a divorce can be remarkably challenging. Shared debt in a divorce is usually split in the same way that assets are — with an eye to divide them fairly between the two, giving consideration to each party’s economic standing.

If this division is not pursued properly and with an eye to protecting both partners, the surrounding issues can follow you long after the marriage has been dissolved. This is because debt doesn’t involve just the two of you; there’s a third party (or parties) who want their money, and they don’t really care which one of you is supposed to pay them. They just want you to pay them. If you and your spouse haven’t paid off or legally resolved each shared debt before your divorce, you run the risk of your ex defaulting on their share in the future, and responsibility for the entire thing falling on you. To avoid this regrettable (and maddening) outcome, the best thing you can do is to either pay off all debts before your divorce is final or take whatever legal action is necessary or possible in order to have the debt put into just one of your names.

Some divorcing couples will be able to trust one another and agree that one of them will pay the mortgage debt and the other will pay for a car loan. But consider carefully before assuming that type of responsibility. If your ex-spouse doesn’t make a promised payment on the debt that they’ve agreed to, your name is still on the contract. Not only will the bank come after you to pay the entire amount in arrears (and penalties and interest), but your credit rating will also be affected. And if your ex files for bankruptcy after you’ve split because they can’t pay their share of a loan, they can have their entire responsibility waived, leaving you legally and financially on the hook.

The best thing to do in situations where there is shared debt is to either pay the debt off completely or to take legal action wherever possible to change the debtor name on all loans. Credit cards should be canceled, and debt transferred into one or the other spouse’s name, and if you can’t get the lending company to agree to the shift in names, then simply sell the asset and start over. It may sound drastic but doing so now will protect you in the long run.

If you’re considering a divorce, our team is here to help. Contact our offices today!