6 TIPS: Make Money And Get Rid Of Divorce Debt

6 TIPS: Make Money And Get Rid Of Divorce Debt

Most married couples choose to merge their finances after getting married. In the case of divorce, each state has particular laws...

While combining assets has many benefits. Like making money easier to manage and helping couples work together as a team to achieve long-term goals. However, when things don't work out, dividing assets and making divorce debt is no joke. Assets and liabilities are divided during a divorce.

As to who is responsible for paying the debt in the event of divorce, each state has particular laws. Some states consider what was contributed to the marriage and others consider it all to be equitable property. If you are struggling with debt in divorce, there are ways to earn some extra money to help deal with that.

1. Pay As Many Joint Debts As Possible Before Divorce

Be proactive and pay as many joint debts as possible before signing the divorce papers. This makes settlement negotiations much less painful.

When it comes to joint debt, even if the court orders debt obligations in the divorce decree, it does not mean that your former spouse will make timely payments or that you are protected from creditors. If you and your spouse owe $15,000 on a car loan, you are both legally responsible for paying it. In this case, if your spouse loses his or her job or is unable to make the payments, you are still responsible for the entire debt. Any late payments can also hurt your credit score.

2. Seek Cash Resources To Pay For The Debt In Divorce

Look for any resources you have to pay off the debt in the divorce. This can be your property, such as stocks, mutual funds or a savings account. You can borrow against your retirement savings; or, if you keep the house, a cash-out refinance can help pay off the high-interest debt. Always consult a financial advisor and understand the implications before making any decisions regarding your cash resources.

3. Adjust Your Budget To Your New Financial Situation With Divorce Debt

To pay off debt in divorce, you must rework your budget. If you were both working, your income may be cut in half or more.

You must now rely on your income, and may be responsible for alimony and child support if ordered by the court. You need to modify your family budget for your new financial situation. Calculate how much income you have after the divorce and take into account every debt and liability. Allocate cash to essential expenses and use what's left over to pay off your debt. If you don't have enough, you'll need to make some changes to the game.

4. Sell Your House

If both names are on the home mortgage, the best course of action is to sell the house and split the proceeds. While you are still living in the house, try to work out with your spouse how much each party will put toward the monthly mortgage payment. Once the house is sold, you can use this extra money to pay off the divorce debt. Another option is to buy out your spouse or be bought out. The mortgage debt may go to the higher earning spouse who is awarded full custody of the children. In those situations, one person may need to buy out the other person.

5. Increase Your Income

Divorce reduces your income and can put you in a difficult financial situation, especially when you are in debt. To help pay off debt in divorce, consider getting a side hustle. A side hustle can be a great opportunity to increase your income and earn some extra money while taking control of your financial situation.

6. Ask for Help When You Need It

When you don't know what to do about your debt after the divorce is finalized, don't hesitate to ask for help. Nonprofit credit counseling is available to help people in debt evaluate their finances and learn how to deal with debt in the event of a divorce. Credit counseling services offer: Help with basic budgeting A debt management plan to help pay off debt in the event of divorce Development of short- and long-term financial goals.

Debt In Divorce

You can still rebuild after dealing with the debt in divorce. It may seem scary, but you are not alone. There are options available for anyone struggling with debt after ending a marriage.

US National Credit Solutions is one of the top rated debt settlement companies in the country. In addition to providing excellent 5-star services to our clients, we also focus on educating consumers across the United States on how to better manage their money. Our posts cover topics related to personal finance, saving tips, and much more. We have served thousands of clients, settled millions of dollars in consumer debt.

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