Joint debts after divorce threaten individual credit

On behalf of Stange Law Firm, PC posted in divorce on Wednesday, November 29, 2017.

Divorce settlements in Missouri represent court orders that establish every aspect of a couple’s split. In addition to dividing property, the settlement assigns debts, like mortgages, car loans or credit card balances, to each party. Jointly held debt, in which both partners signed the loan agreement while married, cannot be entirely overturned by a divorce settlement. Because the creditor has both people on the loan, the creditor still has the ability to pursue payment from one person even if the divorce settlement requires the other ex-spouse to pay the debt.

If the person who was supposed to pay the loan stops making payments, then the creditor might come after the other responsible party. This situation has the potential to damage a person’s credit because that individual’s credit report will now reflect delinquent payments and unpaid debts.

Two approaches offer relief from this situation. Before completing a divorce, a person could strive to pay off outstanding debts. This would eliminate the need to rely on an ex-spouse to meet payment obligations. Refinancing debt into one person’s name instead of two also releases one party from any legal responsibility for a debt.

Someone beginning the divorce process will have many financial matters to resolve. Legal advice could help a person navigate these decisions by providing information about liability, child support calculations, rights to personal property and the potential of qualifying for spousal support. The representation of an attorney could become necessary during a high asset divorce because complex issues like dividing business assets, protecting inheritance or dividing multiple homes could be involved. Legal insights from an attorney about the long-term consequences of certain choices could allow someone to avoid financial hardships and difficulties in the future.

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