Most married couples know that money can be quite a source of contention in their relationship. In some cases, one spouse likes to live frugally and save as much money as possible while the other spouse prefers to spend money as it is earned and live to the couple’s current income level. This type of difference often leads to disagreements and may even contribute to a divorce. When this happens, the spouses must not only split their assets but any joint debt they have incurred.
Value Penguin recommends that divorcing couples work to pay down as much joint debt as possible before they file for divorce. If that is not possible, then it may be wise to try and craft a settlement agreement that allows any remaining joint debt to be paid off. The goal of either approach is to enable both parties to walk away from the divorce without any debt tying them together.
When joint debt remains after a divorce and your spouse is responsible for repaying it, you might assume that outlining such responsibility in your divorce decree protects you. According to U.S. News and World Report, that is not the case. If your name remains on a debt account, the creditor may consider you just as responsible for the debt as your former spouse.
If your ex-spouse fails to pay a debt, or even if they file for bankruptcy and have their responsibility for the debt discharged, you may be pursued for repayment by the creditor. For this reason, you should require your spouse to transfer joint debt that they must pay into a solo account as part of your divorce.