Five ways to deal with credit card debt during your Divorce
It’s no secret, one of the top reasons for a couple to decide to divorce is due to financial strain or financial infidelity. I have worked with many clients who are simply overwhelmed – let me rephrase that: terrified - when they realize the exact amount of credit card or personal debt that they or their spouse have racked up. Often times, the spouse that I am working with has “checked out” and not paid any attention to the marital finances; has no idea of what has been paid or what the current interest rate is-let alone how long it would actually take to pay it off! Their biggest concern is “how will I be able to pay that off on half (or less) than my current income?” It then becomes another reason to either beat themselves up mentally or add fuel to the fire to an already difficult split.
If you find yourself in that situation, here are 5 ways to get your act together for negotiations:
- Get copies of full statements for the last 1-3 years from the credit card company for both joint and personal credit cards
- Sift through statements line by line and determine “yours” and zs” expenses. You may also establish excessive spending patterns on food, entertainment, or clothing
- Look for cash advances
- This could send up a red flag for dissipated marital assets or other lifestyle choices that are hard to trace
- Keep paying (at the very least) the minimum payments due
- You and your spouse may need to purchase new cars, new homes or other big purchases post-divorce. A low credit score could really affect your ability to obtain credit
- Do not hire a credit consolidation company before the final settlement is prepared
- This could ruin credit scores, again compromising your ability to obtain credit for future purchases
- Work with a CDFA or financial expert to figure out strategies to pay down that debt while you’re determining how to divide the marital estate.
- Looking at assets that could potentially be liquidated or sold in order to alleviate debt to will free up cash flow in the future can help you feel better about post-divorce income and expenses
Contact Collaborative Divorce Strategies to get a complimentary consultation on your personal situation: firstname.lastname@example.org