Family Law Now After Hours
Hosted this coming week by Family Lawyers Stephanie Brooks, Joseph Cugini & Shanza Sohail, and Articling Student, Jodeen Williams.
Want to learn about handling debt and loans in separation?
We will be live at 5PM on December 3rd on Zoom and our YouTube Channel, to provide an introduction to the complexities of loans and debt during separation. This series is one of our many commitments to providing our community with valuable resources to support them in navigating family law matters.
Handling Debt and Loans During Separation – What You Need to Know
Separating from a partner is a challenging process, and one of the toughest areas to manage is dividing debt and managing joint financial obligations. Here’s a guide to help you navigate the complexities of debt and loans during separation.
1. Understand the Types of Debt Involved
When separating, it’s important to recognize the difference between joint and individual debt. Joint debts, like mortgages and car loans, are shared responsibilities, while individual debts are typically those incurred by each partner independently.
2. How Debt is Divided
In most cases, debts are divided based on factors like state or provincial laws and each spouse’s financial circumstances. Some jurisdictions require debts to be split equally, while others may consider who benefited most from the debt.
3. Protecting Your Credit Score
One immediate priority is protecting your credit score. Contact creditors to inform them of the separation, close joint accounts when possible, and pay down or transfer balances to avoid future credit issues.
4. Managing Joint Mortgages and Car Loans
When it comes to large loans, like a mortgage, refinancing may be necessary if one person wishes to keep the home. Otherwise, selling the property and dividing the proceeds is often the simplest solution.
5. Dealing with Debt Collectors
If you’re facing collection calls on joint accounts, remember that both partners are liable. Set up payment plans or refinancing options with creditors to prevent escalating financial stress.
6. Refinancing Options
Refinancing can help manage joint debts by transferring them into individual names. This can be beneficial if one party wishes to assume the full debt and take ownership of the corresponding asset.
7. Plan Long-Term Finances Post-Separation
Build a budget for independent living and outline how you’ll handle debt payments. A clear plan will help you feel more in control during this period of transition.
8. Protect Your Financial Future
After settling joint debts, consider establishing individual credit accounts to build a financial profile separate from your former spouse.
9. Seek Professional Guidance
Debt and separation can be complex, and financial professionals can offer insights on structuring payments, protecting credit, and ensuring a fair division of assets.
10. Remember Self-Care
Managing finances can be stressful, but prioritizing your well-being will help you make clearer decisions for a stable financial future.
