What Happens to Debt in a Divorce?


Check out this interesting article on handling debt during the divorce process…

By Wolfe & Stec

“You can divorce your spouse, but it may not be so easy to divorce yourself from the debt that you built together during your marriage.  Americans tend to run up lots of household debt. Debt.org claims that the average American household has over $15,000 in credit card debt, and Bankrate.com did a survey that reports over 50 percent of Americans do not have enough emergency cash to pay off credit card debt.  This debt can haunt you both during and after the divorce process, as credit companies aren’t bound by divorce decrees. They are able to go after you for debts held jointly if your former spouse doesn’t pay.

If your debt was held jointly, you may wind up responsible for the debt held plus interest and penalties. Even if your divorce agreement has provisions to force your ex to pay, going to court to enforce them is expensive.

How To Protect Yourself

It’s always best if you and your spouse can work together to eliminate debt before your divorce, but it is not always possible to do so.  Taking the following steps can help:

  • Get a Copy of Your Credit Report. Avoid unpleasant surprises. Make sure your credit status is good and that your spouse hasn’t run up debt and loans without your knowledge.  Consider signing up for a credit fraud protection service to alert you to unknown activity.
  • Leave the marriage without any jointly-held debt. If you can, work with your spouse to set a date after which agreed-upon portions of joint debt are to be transferred onto new cards in each person’s name and joint cards are to be canceled. You can either pay off the joint cards together or divide the debt already on your joint cards between you and put the debt on the new cards. If you cannot agree, be sure to make a list of all joint credit cards and accounts and cancel them before the divorce to prevent your spouse from racking up more debt.
  • File documents with the courts stating the debt for both parties in order to record how much debt was held on the date the relationship ended. This helps prevent your spouse from running up debt that you might wind up responsible for later.
  • Keep good records of your own charges after your separation date, since that is when debt on credit cards becomes the responsibility of the spouse who made the purchases. Also, you want to be able to prove what is yours.
  • If your debt is overwhelming, you might be able to use joint savings or take a home equity line of credit in your home to help. If this is not an option, you may want to consider filing for bankruptcy to get out from under your credit card and other debts.  It’s best to file for bankruptcy together to make sure that neither party gets stuck with the debt and that you discharge your debts before you start separate lives.”


Curated for Wilson & Reives, a full service North Carolina law firm

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