The same stands true for divorce with much more serious repercussions.

A divorce always has remarkable ramifications pertaining to the financial status of both the parties involved. If unconsidered, it could lead to undesirable liabilities and financial obligations. This ultimately adds to the overall stress and tension accompanying a divorce scenario.

Legal Aspects of Debt

Division of assets during a divorce not only means getting one’s share of marital property and investments. A divorce decree also makes arrangement for the division of debts incurred by both the spouses during their marital life. However, things are not always as simple as they sound. The fact is that orders issued by the court are mandatory for the two divorcing spouses only. Banks, financial institutions and mortgage companies with whom they financially interacted during the course of their marriage are in no way bound by the decisions made by the domestic law court. This inevitably makes the overall situation very confusing.

Settlement of Debts is a Big Problem

Great Britain with its share of 160,000 divorces each year is fraught with people facing serious problems owing to an inability or confusion related to settlement of debts. Research has shown that more than 52% of the time, debts are incurred by people because of divorce or separation. 45% of divorced individuals believe that settling debts after a divorce is the most stressful aspect over the distress of losing a partner. Almost 30% of divorcees solicit the services of some professional debt counselor to settle their debts. Surprisingly, 10% of divorcees have to file for bankruptcy because of their post divorce debt problems. I think these statistics are enough to open the eyes of any person considering a divorce.

Debt and Emotions

One big reason for this pathetic state of affairs is that people caught in a divorce situation, often become victims of a decision related vacillation owing to their concern for their partner. Being enthusiastic about monetary matters at such a life changing moment appears to be raw and greedy. The reality is that debt settlement is in fact an integral part of any divorce settlement. Any failure or delay in sorting out your debt issues may chronically jeopardize your post divorce life. Even if you feel that your partner is amicable and nice, you should still decide upon the debt liabilities by soliciting his/her help and cooperation. On the contrary, if the level of conflict between you two is high, then it makes it even more imperative to protect your financial interests.

Divorce and Debt

If you hold a joint bank account or a joint credit card with your spouse, you have the legal responsibility to pay for the debt incurred on them. Banks are never a party to the divorce suit between you and your spouse and have the right to ask both of you for paying your dues. Which spouse benefited from that debt is of no consequence to them. So once you decide upon a divorce, start separating your finances immediately. Cancel all the joint credit cards and close all your joint accounts. Withdraw any authorization you may have provided to allow your partner to sign on your behalf. Implement procedures to prevent your partner from incurring more charges in your name. In case you fail to do so, any missed payment on your joint bank accounts will have a negative impact on your credit rating.

Divorce and Mortgage

A family home is certainly the most prized possession when it comes to division of property following a divorce. Though the divorce decree will decide who has the right to live in the home or has its ownership, this certainly does not relieve you of your responsibility to pay for home mortgage. To simplify things, you may get your mortgage refinanced, making only one of you responsible for all the payments. The other possible option could be to sell the home and divide the proceeds. Do not forget to consult your income tax adviser regarding the tax consequences of such a sale.

A conscious approach and a balanced mind will go a long way in securing your financial future after a divorce. So take the step and do not leave anything to chance.