When married spouses decide they can no longer continue as a couple, they must figure out how to disengage themselves from their co-mingled life and create two, separate single lives again.
The division of assets receives a lot of attention during a divorce but a couple’s need to divide or otherwise address shared debts must also receive scrutiny because it may factor into their future in ways they would rather avoid.
Debt responsibility after a divorce
U.S. News and World Reports explain that a creditor views any person named as an owner on an account to be liable for the debt. This ownership may be viewed as valid even after a couple has divorced and the terms in the divorce decree assign responsibility for the debt to only one spouse.
If the responsible party makes any late payments or misses any payments, the creditor may report those actions on both spouse’s credit reports. In addition, the creditor may choose to pursue repayment from both parties. For these reasons, many people try to pay off all joint debt before their divorce completes. When this cannot happen, they may look for ways to transfer debt to new accounts in one person’s name only.
Debt accrual and liability
According to SoFi, divorcing spouses should pay close attention to their legal date of separation or other date after which any accrued debt may be deemed to be the sole responsibility of only one person. Understanding this may help people get a better view of how much joint debt they may need to address as part of their divorce.