Divorce and Debt Consolidation

By Gina Pogol
Mortgage Credit Problems Columnist

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If you are living with the financial fallout from a divorce, a debt consolidation mortgage loan could help you manage the unexpected increase in your monthly payments and avoid getting a bad credit rating. If you are in divorce proceedings, a debt consolidation loan can protect you from surprise liabilities in the future. Here's why:

You may be liable for your spouse's debts even if the divorce decree relieves you of them. Creditors rarely release a divorced spouse from joint liabilities incurred when the couple was still married regardless of the judge's order. In community property states both spouses are considered equally liable even for individual debts incurred while married, and creditors will go after one spouse if the other doesn't pay. As unfair as it seems, you may have to pay your ex's credit card debts if he or she defaults or files bankruptcy. The safest way out is to pay the debts off before completing divorce proceedings. If each spouse takes a debt consolidation mortgage against his/her own house, paying off the debt he or she is responsible for, then neither spouse gets stuck with the other's bills and both are protected.

Your bills might take a higher portion of income than they did before. You could be maintaining your own household all by yourself, and you still have credit card debt left over from your married days. A debt consolidation mortgage can make the added load easier to manage until you find your footing.

Your ex just filed bankruptcy and the creditors are after you. This is a financial emergency and all options, including debt management programs, budgeting and lifestyle changes, and even bankruptcy should be weighed. Debt consolidation loans can be valid solutions to credit emergencies.

Divorce is cited as a top cause of bankruptcy. Avoid bankruptcy and bad credit by consulting your lawyer and your lender to clear debts before divorcing.

Divorcenet: Five Steps to Divorce Yourself From Unsecured Debt

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