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Important considerations concerning divorce and debt

Once a divorce is finalized, most people will understandably breathe a sigh of relief, thankful that the physically and emotionally difficult process has come to an end. Furthermore, most people will find some solace in the fact that all matters have been resolved and that they no longer have to worry.

While this last point is true to a certain extent, it's important for the newly divorced -- and those whose divorce occurred within the last few years -- to realize that this isn't necessarily the case when it comes to debt repayment obligations.

For instance, if you and your former spouse had a jointly held credit card and your spouse agreed to continue making payments on the debt as part of the final divorce decree but has since failed to do so, you can still be approached by the creditor for payment.  

That's because the creditor was not a party to the divorce, meaning they are free to collect from either you or your former spouse.

"You can put in big, bold letters that your ex-spouse is going to pay the credit card debt from the joint card, but if the ex doesn't pay and you send your decree to the credit card company, they'll likely laugh before they throw it in the trash," said one family law attorney.

The good news, however, is that there are some strategies that people can take to protect themselves -- and their credit scores -- in these types of scenarios.

Be proactive: Reduce the potential for future charges and tie up loose ends

At the very minimum, experts suggest that at the outset of a divorce, a person takes steps to remove their soon-to-be ex-spouse as an authorized user on their card account in order to prevent any future charges.

When it comes to jointly held accounts, however, a person does not have this option. Nevertheless, experts say they can request that the credit card company put a freeze on the account such that no more money can be charged while the divorce is pending.

Finally, experts recommend that a person secures a copy of their credit report and looks for any older or seldom used jointly held accounts/accounts with their ex as an authorized user, and taking the steps outlined above.

To be continued ...

Consider speaking with an experienced legal professional if you would like to learn more about all that the divorce process entails, including your rights and your options concerning property division.

Source: Fox Business, "Debt and divorce: 5 steps to make a clean credit split," Dawn Papandrea, July 14, 2014

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