Tips For Protecting Your Credit Over Joint Debts In A Divorce
If you are getting divorced and have debts in both of your names, you may need to talk to your lawyer about this to ensure the debts are paid and split properly. While you may both end up responsible for paying half the debts, keeping them in joint accounts is not a wise option. This could end up ruining your credit, if your ex-spouse does not keep up with his or her end of the bargain. Here are four tips to help you avoid credit issues because of joint debt.
Insist On Selling Things To Pay Off The Debts
If you and your spouse have cash on hand, or if you mutually own assets of value, you may want to insist on selling the assets and using the cash to pay off the joint debts. By doing this, the debts will be paid off, and you will not have to worry about your ex-spouse paying his or her portion of the debts.
Get Loans To Pay Off The Debt
When a couple does not have enough cash to pay off debts, or have assets to sell, they could each apply for personal loans. These loans would not be jointly owned, though. Each spouse would have to get his or her own loan. The proceeds could then be used to repay the joint debts, and each spouse would only be responsible for his or her own personal loan afterwards.
Close All Accounts
The third thing to do no matter how you choose to handle your joint debts is to close all joint accounts when the divorce proceedings begin. When you close the accounts, the balances will remain; however, neither spouse will be able to rack up further debts with these joint accounts.
Ask For An Indemnification Clause On Remaining Debts
If there is no way to pay off all joint debts completely before the divorce is through, you can ask your lawyer to include indemnification clauses on your divorce decree. An indemnification clause is used to state which spouse is responsible to pay a joint debt. While this will not hold up with your creditors, you could always take your spouse back to court if he or she does not follow through with it.
Keeping your credit in good standing is important for many reasons, but it can be hard after a divorce. If you are worried about this issue, talk to your divorce attorney to find out if there are other steps you can take to protect yourself and your credit.
Speak with a law firm like Bray & Johnson Law Firm for more information.