There is such drama in many divorces that though finances are critical, mistakes can and are made. This guide points out what you need to know about bankruptcy after a divorce, managing secured and unsecured debts, and protecting yourself from owing debts your spouse created.
How Bankruptcy and Divorce Work
The problem is that if you and your spouse both created debts, namely unsecured debts such as credit card and hospital bills, you are both listed as owing the money. Even if you had nothing to do with the credit card debt, you are still liable for paying it (as is your spouse). Many mistake a divorce as a break from credit card and other unsecured debt. This is because you made an agreement with the credit company or other party prior to divorcing; therefore you still owe the money. There is no easy way out; both you and your spouse are liable for joint debts. If you're unsure of what debts are there, or your options, you may want to contact an experienced bankruptcy lawyer.
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Protecting Yourself from Secured Debt
However, there are steps you can take to better your situation. This includes bankruptcy, but even if you choose to file, you should find any open joint accounts you have. If your spouse is in possession of a credit card in both your names, charges thousands of dollars, and doesn't pay, that effects you. Of course, it doesn't always happen that way, but it is possible.
How do you find out about all these accounts? First, you need to go through whatever open accounts you have. This includes even small store credit cards in both your names. You can also choose to save some time and effort and get your credit report. Here, you can narrow down any accounts in both your names. The credit report can show open and joint accounts.
Closing Accounts
You may wonder what to do with these accounts, or how exactly to close them. If there is money owed on the joint account, you cannot close it. Any joint accounts you have which you can close, do so. You can then freeze any accounts where you still have balance; this stops any further charges from being made. After you close accounts, be sure to show clear proof of this in case they continue to be charged; you can get a confirmation of the closed account from the creditor.
What if you still owe money?
If you still owe money on certain accounts, and potentially you're still going through the financial side of the divorce, you may wonder what to do. Ideally, you want to pay on these or have your spouse do so; if you miss payments it can hurt your credit score which then hurts your ability to get new credit cards and loans.
At the least, you should consult with an experienced lawyer, especially if any of these steps confuse you. This is not rocket science, but it's not easy either. If you have to file bankruptcy after you divorce a spouse, you definitely need to consult with a bankruptcy lawyer. It does not always matter who created the debts; if the debt is from a joint account, you both owe money, and bankruptcy can quite often discharge the debt or make it manageable.
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