Divorce is hard enough without one spouse abusing the financial end of the relationship. But take heart, there are a few tried-and-true ways to get an ex-spouse's debts cleared up – for good.
If you let a debt situation go unresolved, you're right back in the ringer – this time with a former romantic partner who may not want anything to do with you. (For more on debt, read Can You Live A Debt-Free Life?)
TUTORIAL: Credit And Debt Management
Job one after a big breakup is to take a magnifying glass to your combined debts. By law, most joint debts are tied to the original terms of the contract, meaning anyone who has put his or her name on a debt contract – say a credit card or car loan – is responsible for that debt. So if you co-signed a loan for your ex-spouse's new Cadillac, or shared a credit card, tough luck – the creditor will go after you if those debts go unpaid.
Read on to find out what right you have and what steps can you take.
Contact Your Creditors Immediately
If you just got divorced, or had a live-in arrangement where you opened up joint credit accounts, get going. Call your creditor and ask that your name be removed from a debt account, or close the account outright if your ex-spouse's name is on the account as an authorized customer. If you are in a divorce situation, or see one coming down the tracks, act fast and separate those joint accounts as soon as possible. It's usually easier to dislodge yourself from a joint account while you're still married, rather than after you've divorced.
Track Your Ex-Spouse's Debt Repayments
If you can't disengage from a joint account, or if the process is a slow one, ask your creditor for online access to any joint credit accounts with your ex-spouse. That way you can check the progress on debt payments from an ex-spouse. If this sounds high-handed, note that any missed payments from an ex-spouse will wind up on your credit report – and hurt your financial reputation. (For related reading, see How Much Debt Can You Handle?)
Ask for Short-Term Help
If an ex-spouse is having financial difficulties and can't pay a joint-debt back, ask the creditor (like a credit card carrier or a mortgage lender) if you can arrange a few months of interest-only payments. Creditors are usually open to that deal, especially if you're open and honest in describing the situation (you're not the first divorcee a creditor has ever seen, and you won't be the last). If your ex–spouse falls behind on those payments, be prepared to step in and make them yourself to protect your credit rating.
Know Your State's Community Property Rules
Credit accounts opened during a marriage or a live-in partnership are especially onerous in a community property state. According to the Internal Revenue Service (IRS), community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Ignore Any "Promises to Pay"
Too often, one party in a divorce negotiation is suckered into agreeing to a deal where the other spouse promises to repay a debt. Don't fall for it. A promise to pay isn't worth the paper it's written on to a credit card firm or a bank. To the creditor, you're both liable for the debt – no matter what the divorce decree says.
Lastly, make sure you get a copy of your credit report and review it for any unpaid bills in your name. And before you officially separate, open your own bank account – if your ex-spouse gets into the habit of not paying his or her bills, and begins bouncing checks it will be harder for you to open that account after the divorce.
The Bottom Line
Divorce is a drag, but it can get a lot worse if you don't take care of joint-debt accounts. Take the above steps and nip that problem in the bud – and get on with your life. (For more information, read Get Through Divorce With Your Finances Intact.)