D is For Defining Debt

D is For Defining Debt

defining debt

Debt comes in many forms such as credit cards, loans, student loans, car loans, mortgage, equity line, and family loan agreements. Credit card companies aren’t bound by divorce decrees, so they can go after you for jointly incurred debt.  Defining your debt is important when going through a divorce. The goal in your divorce is to be financially secure so you want to have as little debt as possible and be able to pay it off.

Questions to Consider :

  • Whose name is on the debt?  Who has access to it?
  • Who is going to keep paying it as you go through the divorce?
  • What interest rate are you paying on the debt and when is the payment due?
  • Find out what you owe, you can do this by obtaining a credit report from www.annualcreditreport.com.
  • Can you assume the mortgage and are you able to afford it if you take ownership of the house in the divorce?

Consider the following actions:
1) Stop future purchases using joint credit cards or any loans (including the equity line) in both names immediately.
2) Call your bank and make sure they are required to get both signatures if either party wants to use the equity line.
3) Or talk to your lawyer about freezing the equity line or the situation.
4)  Talk to your credit card company or bank and look into transferring cards under each person’s name.
5) If you have never had a credit card in your name before, try to get a gas or department store card that you can pay off monthly to build up your credit history. Don’t apply for more than one credit card at a time.   Applying for credit in a short period of time can hurt your credit score.


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