1 in 5 Divorced People: Debt Contributed to Their Split | Personal Loans and Advice

For many couples, marriage is synonymous with buying a home, starting a family and navigating life’s milestones in sickness and in health. But many things in life come at a cost, which is often financed using mortgages, joint credit cards and other shared loans. When marriage ends in divorce, untangling these financial obligations can be a difficult task for former spouses, according to a U.S. News survey.

Between Jan. 22 and 25, U.S. News ran a nationwide survey of 1,210 divorced people, conducted through PureSpectrum. We asked respondents a series of questions about their shared marital debts and how divorce impacted their overall financial well-being. Here’s what we found:

Sharing debts with your spouse, such as co-signing a mortgage or opening a joint credit card account, seems like a natural step to take with a person with whom you already share financial responsibilities. In the event of a divorce, however, separating marital debts can quickly become a complicated process.

Who becomes responsible for repaying shared debts depends on a number of factors, like whose name is on the debt, the laws of the state in which you lived and any prenuptial agreements.

Two-thirds of those surveyed (66%) had at least one shared debt with their former spouse, while 34% had kept their debts separate. The most common types of shared marital debt stemmed from credit cards, mortgages and auto loans.

Among respondents with shared debt, about four in five (79%) say that separating those debts in divorce was difficult, including 18% who say it was “extremely difficult.” Additionally, 41% say they don’t believe their marital debts were split fairly in the divorce, and even more (43%) don’t think their assets were split fairly.

About a fifth (19%) believe that debt was a contributing factor to the divorce, including 25% of those who had shared debts with their former spouse.

Among those who later remarried, most (71%) opted to keep their debts separate from their next spouse. Half of those who haven’t remarried say they would keep their debts separate from a future spouse, while 27% say it depends on the person and 10% say it depends on the size of the existing loan.

One of the conveniences of marriage is that couples can spread their shared living expenses across two incomes. The opposite is true of divorce, since those who have become financially co-dependent must find a way to manage household expenses on their own.

More than half of respondents (56%) say they find it more challenging to pay their bills as a one-income household. About the same amount (55%) had to take steps to increase their income as a result of their divorce, such as taking on a second job.

Those who share children with their former spouse (59%) were more likely to report having to find ways to increase their income after their divorce than those who didn’t have shared children (49%).

By itself, getting a divorce doesn’t necessarily hurt your credit score, since your credit report doesn’t state whether you’re single, married or divorced. But how your shared debts are managed during and after the divorce process can have a significant impact on your credit history.

Those in our survey were much more likely to experience a negative credit score impact than a positive one. While 16% say their credit score improved after their divorce, 45% say their credit score took a hit.

Just because you’ve filed for divorce doesn’t absolve you of your responsibility for repaying shared debts. If your name is still on the account or the loan, your credit can suffer if your ex misses a payment. Over a third of respondents (37%) have missed a payment on their debts due to their divorce.

Freedom from your spouse doesn’t have to come at the expense of your own financial freedom. Here are some tips for handling shared marital debt during the divorce process.

Divorce is a complex legal process with results that vary widely based on your situation, so it’s prudent to hire a lawyer who will protect your financial interests. After all, your attorney is your advocate when it comes to finalizing the terms in your divorce, including who is responsible for repaying which debts and how your assets will be split. If paying for an attorney is an issue, visit FindLegalHelp.org to see if you qualify for pro bono legal services through your state’s bar association.

The most foolproof method for finding any open credit accounts you have is by reviewing your credit report, which shows details of the debt such as the names associated with the account, how much you owe and your payment history. You can get a free copy of your credit report from all three bureaus (Equifax, Experian and TransUnion) on AnnualCreditReport.com. You might also consider freezing your credit as your divorce progresses, but keep in mind that doing so will stop you from opening any new accounts in the meantime.

Reach out to your creditors to let them know about your new circumstances. You should be able to remove your ex-spouse as an authorized user on accounts that are under your name, which will stop your ex from making new charges but won’t erase existing debt. You may be able to close joint accounts that are paid off or possibly convert a joint account into an individual account in your own name. To convert a joint account, you’ll need to reapply as the sole account holder, and the creditor will review your credit history and income to determine whether you qualify on your own.

While finalizing the divorce, it’s important that you are repaying any shared debts. Your lenders still expect timely monthly payments, and you could face the consequences of delinquency if your name is on the loan, even if you aren’t living in the home or using the car. Keep the lines of communication open between you and your former spouse – or at least ensure your divorce attorney is communicating with your ex-spouse’s lawyer.

Depending on the divorce agreement, your ex may be required to reimburse you for payments made toward shared debts. This is especially pertinent if you’re getting divorced in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin), where both spouses may be liable for repaying debts incurred during the marriage regardless of whose name is on the account.