Money & Career
Learn How to Divorce Your Debt
8/3/2017 10:30:43 AM

For years, divorced couples have been surprised to discover that divorce papers didn’t separate their debt. They’re stunned by problematic credit reports reflecting their ex-spouse’s dodgy payment habits and angered when collection agents call for payment on debts that the ex was supposed to pay. The result can be an undesirable credit report for an otherwise responsible consumer.

"In addition to custody arrangements and settlement decrees, divorce papers sometimes make reference to credit debt. The papers may spell out precisely who is to pay what. There’s only one problem with that – the credit agency carrying the debt doesn’t necessarily care what the divorce papers say. They’re more concerned with whose name is on the account,” said Lyles McDaniel, Senior Vice President with Lakeside Bank. "Just as the divorce decree is a contract, so are the documents that were signed with the lending agency.”

A court order may state that the ex-husband is to pay off the credit card, for example, but if the account is in the ex-wife’s name, that order doesn’t automatically protect her from having to pay it.

"It’s common for a couple to accumulate debt together during their marriage, so this is a problem that arises often, unless appropriate steps are taken during the divorce proceedings,” McDaniel says.

He offers the following advice for couples who want to ensure that they divorce their debt as well as their spouses:
  • Make sure both of you have a good understanding of your financial situations – this includes all debt and whose name the debt carries.
  • Find out if you are an authorized user or co-account holder on your credit cards. There’s a significant difference between the two. An authorized user is a person who is not responsible for payments, but is permitted to charge items on the account. An account holder is responsible for making payments. If you’re just an authorized user, the lender may remove you from the account at your request. 
  • Refinance debts in the appropriate name. If your husband is a co-holder on an account but you are the primary account holder, make sure you remove his name, and make sure your name is removed from similar accounts. 
  • If neither of you can afford the mortgage payments on your own, sell the house, split the profits, and use some of the money to pay off other joint debts.
  • Sign up for a credit-monitoring service and keep track of all accounts that bear your name. If you have joint debt that you weren’t able to individualize, this will allow you to monitor payments and charges to make sure your credit report doesn’t fall victim to activities of an ex-spouse.
  • "Your personal banker can also provide financial advice in these matters,” says McDaniel. "Don’t hesitate to ask.” 
For more information, call the Lakeside branch nearest you or visit
Posted by: Kristy Armand | Submit comment | Tell a friend

Categories: Finances

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