Navigating through debt post-divorce can be a daunting task. Luckily, there are a variety of strategies available to help manage debt post-divorce. To help you manage this effectively, I've gathered six insightful strategies from content marketing and business leadership professionals. From considering debt settlement post-divorce to negotiating with creditors and seeking professional help, these are the top tips they've shared.
How to Manage Debt After a Divorce
Consider Debt Settlement Post-Divorce
If you end up solely responsible for a debt accrued during your marriage and cannot afford to pay it after the divorce, debt settlement could be an option.
Debt settlement allows you to pay off debts for less than you owe. Most times, working with a trusted debt settlement company is advised. Companies that provide debt settlement programs will negotiate with creditors on your behalf to secure new terms that lower what you owe so you can get out of debt years earlier and for much less than other repayment methods.
If you enroll multiple accounts in a program, you can merge and lower your monthly payments, which takes immediate pressure off your budget. It's a great option for people who can't keep up with minimum payments and want to avoid filing for bankruptcy.
Anna Caldwell, Content Marketing, Accredited Debt Relief
Prioritize and Strategically Pay Off Debts
Knowing what matters most to you will help you prioritize your financial goals following divorce. Prioritizing and strategically paying off your debts is an important method to help manage debt repayment.
Start by compiling a table of all your debts and sorting them according to interest rate, placing the loans with the highest interest rates at the top. Next, pay off the bills with the highest interest rates first while making the minimum payments on the remaining loans.
This will save you money in the long term by decreasing the interest you pay over time. You'll soon be on the road to financial security after divorce if you stick to your strategy and keep moving forward.
Samantha Hawrylack, Founder, How To FIRE LLC
Stay Organized and Create a Monthly Budget
Dealing with debt after a divorce can be tough. But here's a smart move: create a monthly budget. It gives you a clear view of your finances and lets you adapt to your new situation.
Start by jotting down your income sources and categorizing your expenses, including those debt payments. Look for areas where you can cut back and prioritize debt repayment.
Loren Howard, Founder, Prime Plus Mortgages
Establish a Financial Action Plan
A successful way to handle debt following a divorce is to establish a financial action plan. This plan should include details about all your debts, income, and expenses. Start by listing your assets and liabilities—any property or money you owe.
Next, outline how much money you bring in every month from work or other sources of income. Finally, list your expenses, including any money you are obligated to pay in spousal or child support.
Once you have an accurate picture of your financial situation, creating a budget and prioritizing payments will be easier.
Keith Sant, Founder and CEO, Sell My House Company
Remove Your Name From the Ex-Spouse's Debts
You should remove your name from any outstanding debts in your name, but for which your ex-spouse is responsible. Brush up on the rules of the co-signed loan.
You share many things in common when you are a spouse and in a relationship. You both pay expenses equally, but getting divorced makes things worse.
Post-divorce, bear expenses on your own. This will not be easy if you have kids too. You can ease some burden by removing your name from outstanding debt. It can lessen the burden of expenses on you. Obtain a co-signer release.
You can also have other borrowers refinance the loan into their names. Or, if you are the only one who has to pay loans, sell the asset and pay off the loans. However, removing a name from a co-signed loan will not be easy.
Saikat Ghosh, Associate Director of HR and Business, Technource
Negotiate With Creditors and Seek Professional Help
Reach out to your creditors and let them know about your situation. They may work with you by adjusting payment plans or interest rates. Don't be afraid to negotiate. Remember, they want their money back too.
You may also consider seeking professional help from a financial advisor or credit counselor who can guide you throughout the process.
Johannes Larsson, Founder and CEO, JohannesLarsson.com
Handling the burden of debt that comes with divorce can be daunting, leaving individuals feeling lost and overwhelmed. These six strategies offer a starting point if you are struggling with debt post-divorce, allowing you to take control of your finances and move towards a brighter future.