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What happens to debts when you divorce?

Financial troubles are a primary cause of many divorces. Money matters may continue to be a problem as a couple tries to settle their divorce and long after its finalization. Debts don’t magically disappear when a couple divorces. You and your ex will likely have to divide your debts when you divorce, but this might not mean too much in practice. 

A divorce is a legal agreement between the two parties who are ending their marriage. Neither your attorneys nor the court includes your creditors in that agreement. Therefore, they don’t have to abide by the terms of the property division settlement. Your creditors can still hold both spouses accountable for debts in most cases. 

What’s the point of dividing debts?

The court can order one spouse to pay specific debts. Judges also have the authority to take action if you or your ex fail to pay what you owe. Unfortunately, there is a chance that creditors will still report the unpaid or late paid debt to the credit bureaus, which will impact a spouse’s credit score. 

Some spouses end up entering into divorce agreements that require them to sell off assets to pay down marital debts so that neither one is responsible down the line. This option might be ideal for you and your spouse if either of you has concerns about the other paying what they owe.

Another option is that you two can attempt to transfer the debts into one of your names. Creditors don’t have to agree to this. Whether they decide to do so depends on each spouse’s creditworthiness. 

It’s best to discuss these situations with an attorney. Some couples may find that bankruptcy before divorce, or even after divorce, might be an ideal option for them to pursue. Learning about all the possibilities can help couples make informed decisions about their situation.