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What to Do With Joint Debts and Loans After Divorce?


Written Exclusively for It's Over Easy by Lidia Staron

Divorce is certainly one of the most stressful times in anyone’s life, and don’t think that it ends after the papers have been signed, or after you've filed your divorce online. There are still a lot of factors in your new life that you still need to figure out: co-parenting, building a civil relationship with each other, and of course, recovering from the emotional turmoil that led to the divorce in the first place. 

Yes, it really is a difficult chapter to move on from, and it’s even more problematic if you have financial ties that you share with each other.

This is exactly what we are going to talk about today. In this article, we are going to discuss what you need to do with the debts and loans that you have made together, now that you are separating. We also understand that there are different kinds of debt from credit cards to student loans, and that each type of debt may have its own specific circumstances that you need to consider. Hence, allow us to segment this article accordingly.

Credit Card Debt

Let’s start with the simplest type of debt--credit card debt. There are two types of credit card debt: one that is registered under a personal name, and one that is considered by the credit card company as a joint account.

If you’re worried about your partner’s personal credit card debt, don’t. You won’t be held responsible for it, especially after the divorce. However, if you and your ex have a joint account, it is wise for both of you to settle the debt before you complete the divorce process. This way, you’ll be able to make a clean break once your divorce is finalized, and you may be able to spare yourself from paying accumulating interest rates, and/or fees in case one of you grows tired of paying the bill.

If neither one of you have the funds to pay off the credit card in full before the divorce papers are signed, then you may want to look at personal loans for fair credit options, only this time, apply separately. Use the money to pay off the credit card debt. You can simply continue paying the secondary debt, the personal one, in your own time after the divorce.


Here’s something that’s a little bit more complicated: mortgage debt. The cleanest way in order to get around this is to sell the home, pay off any remaining balance, and split whatever is left.

We understand, however, that there are people who don’t want to sell their marital residence just yet. After all, divorce and a move can be pretty rough and if you have kids there is often an emotional attachment to the property where they were raised. If one of you wants to keep the marital property, then you have two options:

Buy out your partner. You can even request the mortgage company to remove your partner’s name from the title.

Refinance. Your mortgage lender may have programs you qualify for to refinance your existing loan and you may be able to apply under your name alone.

Business Debt

Business debts can be complicated. One of the reasons is that many people use money loaned to their business for personal expenses. During marriage, personal expenses are often paid for from a joint (marital) account which is used for the community (spouses and any children). Co-mingled funds like that may add another layer to the situation.

Ideally, you should have all the documents related to the original debt. In addition to the original loan documents, we also recommend creating a payment agreement with your partner that you both sign, plus you should draw up an updated document detailing where the money went (regardless if personal or not), and how much of the debt has already been paid. These suggestions also apply if you have taken out a loan to start a new business. If you have been diligent about keeping your Articles of Incorporation and/or any other identifying documents for your business, you can add the new agreement and the other documents to the same folder. If you're ex-spouse, or soon-to-ex-spouse is un-agreeable, you may find that legal proceedings may be required. Remember though that the person to whom this business is registered is responsible for any debt regardless of the arrangements you make with your spouse after the loan is funded.

The second scenario is the business is registered to both of you as partners. If that’s the case, then you would need to settle the loan according to the terms that you agreed to upon applying for it. You can opt to continue running the business together as professional partners. And of course, you can also choose to buy out your spouse.

Travel and Other Personal Loans

Finally, remember that loan you took out when you decided to go to Paris that one summer? Well, ideally, it should have already been paid for before the divorce was finalized but let’s face it, traditional divorce is expensive, which is why we recommend online divorce as a much less expensive option.

Well, just like the previous types of debt, unless you have a signed agreement that affirms you and your partner have decided to pay it together, then the person whom the loan is registered is obligated to handle the repayment themself.

About the Author

Lidia Staron has been working as a writer, editor and literary coach for 5 years. She contributes articles about the role of finance in the strategic-planning and decision-making process. Apart from financial topics, she writes on health, life, travel-related topics. Lidia provides insights on different topics to help those who need it. You can find professional insights in her writing.