When a couple divorces, they agree to split their debts as well as their assets. However, all joint debts are the responsibility of both ex-spouses—regardless of what the divorce decree says—and creditors will continue to hold both parties responsible for repayment. For this reason, a soon-to-be divorced couple should agree on who will be responsible for paying off joint loans or accounts and sever all joint accounts so that no further common debt is incurred.
It is common for one or both ex-spouses to experience difficulty maintaining a separate household following divorce. This, too, can affect their credit if credit cards or loans are used to make ends meet. Difficult as it is, divorce often requires a downsizing of household expenses, such as moving to a less expensive home, to reduce housing costs.
We would like your feedback on this Personal Finance Frequently Asked Question.
