Having debts with your ex-partner or owing money in your name could be heart wrecking.
There is always the temptation of ignoring the debt problems because money is usually tight while you sort out your finances after a divorce.
Ignoring the debt problems seems like an easy way out—but what happens when you are faced with it and there is no escape? The best approach is to deal with them as soon as possible to make the process easier.
Here is the hook:
There are crucial steps to take to deal with the debt problems after a divorce. Keep reading. You will find out.
1. Determine Which Debt to Pay First
It is crucial to prioritize what you can pay for if you do not have enough money to cover your bills, payment of loan(s), and mortgage.
You can start with debts like the mortgage or rent, council tax arrears, gas, and electricity bills.
It is necessary to sort out these priority debts because it comes with severe consequences like losing your home or taken to court.
2. Sort out Loans and Credit Card Debt
The moment you have sorted out your priority bills, the next line of action should be finding out a way to settle other debts that are pending—like the one you owe on bank loans, catalog debt, store cards, or credit cards.
You can use two methods for this: contacting the lender to tell them what you can pay or using a budget planner to determine the amount you can repay.
You can also choose to go for an option that does not cost money—which is getting advice from a debt advice charity.
There is a possibility that the charity may be able to ask the company to freeze the interest while you figure out a repayment plan.
It is a good idea, but you have to bear in mind that there is no guarantee this will happen.
3. Opt For Restrictions or an Agreement
Did you have any joint debts like a mortgage or a joint bank loan? If your answer is yes, then both partners are liable to repay the whole amount.
However, in a situation where your ex proves stubborn by refusing to pay their share, the whole burden will fall on you because the bank or building society may ask you to make all the payments.
In this case, you can contact the bank and inform them about your divorce. Once you do that, it is best to put some restrictions on the account to ensure that your ex-spouse does not incur more debts.
You can also opt for an agreement with the institution to accept lower payments if you cannot repay in full.
4. Strike A Deal with Your Ex-Partner
It is almost impossible for the bank to let you separate a loan when you have a joint mortgage or loan with your ex-partner.
What do you do then?
Try and reach a consensus with your ex-partner on how he or she will refund it as both of you are liable to pay off any joint loans.
You can start by making an arrangement; one of you pays the bank but gets a contribution from the other.