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Getting a Divorce? Debt Consolidation Loans Can Help You Save Your Credit and Your Money

By Gina Pogol
Mortgage Credit Problems Columnist


Just because a divorce court judge says that you aren't responsible for debt that your spouse incurred doesn't mean your creditors will see it that way. Because if you both signed up for that credit card or car loan, you are both obligated. Joint debt is just that--joint--and you can't get rid of it just by dumping your spouse. Yes it's unfair--he gets awarded the big screen, why doesn't he automatically get the payment? She got the Porsche, but he still has the loan. Ouch. And it gets worse--in community property states, both spouses may be considered equally liable even for individual debts incurred while married, and creditors can go after one spouse if the other doesn't pay. So if your ex defaults or files bankruptcy, you could be held responsible for debts taken on while you were married.

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How to Avoid Bad Credit After Divorce

The safest way to avoid credit problems after divorce is to separate your debts before filing. Pay off joint debts and get new credit in your own names. Each of you may be able to consolidate your share of the household debt into a new credit card with a balance transfer. Or you may be able to get personal loans to retire joint debts if you don't have bad credit. The spouse who gets the family home may be able to complete a debt consolidation by taking a home equity loan. You can compare home equity loan options by completing the form on this page. The key is to one way or another have nothing financial hanging over your head once your divorce is final.

Your New Life and Your Finances

Once you have severed ties with your former spouse, your finances may be tight. It is generally more expensive to maintain two households than one, and your expenses may well be more than they were while you were married. If you are feeling the pinch, consult a reputable credit counselor for budgeting advice, and perhaps help negotiating a little debt relief from your creditors. You may be given a debt management plan to follow, which may include a debt consolidation loan. Another option for debt consolidation is a cash-out refinance. With FHA loans, you can refinance up to 85% of your home's value, and you can take out cash for debt consolidation. You can find cash-out refinance opportunities by filling out the form on this site and comparing the best offers of several lenders.

Sources

http://www.divorcenet.com/ / http://www.credit.org

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