Your Ultimate Guide to Divorce and Debt

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Sometimes the most emotionally trying times in life are also the ones in which you have to be the most mindful of your finances. Unfortunately, this is definitely the case during divorce.

There are few things more heartbreaking than the end of a marriage. However, divorce can also be disastrous for your finances if you’re not careful — both during and after the proceedings.

Here’s everything you need to know about divorce and debt so your finances come out unscathed.

How to handle divorce and debt responsibly

When it comes to an amicable divorce, it all depends on how well you and your soon-to-be-ex-spouse work together. The better you can work together, the easier the proceedings should be.

Either way, there’s a good chance you’ll be talking to a lawyer soon. Here are some tips to help you handle divorce and debt, including a few from financial attorney and author of “Life & Debt”, Leslie H. Tayne of Tayne Law Group P.C.

1. Tally up the debt

No matter what type of debt you both share, make sure you add it all up. This includes credit cards, student loans, mortgages, auto loans and personal loans.

According to Tayne, you should know the debt amount and whose name everything is in, as well as what the payments are and the names of the creditors.

It’s also very important that you are 100 percent honest when you’re tallying up your debts. So if you’ve been hiding any debt from your spouse, confess to it now.

Once you tally up your debt, convert it into two lists (which I’ll discuss later on):

  • List 1: Debt brought into the marriage.
  • List 2: Debt that occurred during the marriage.

2. Figure out how you’ll split up the debt

Once you and your spouse part ways, you may also want to split up your debts.

Perhaps one of you had student loans before the two of you were married. Or maybe one of you took on a debt that the other didn’t agree with at the time. Either way, it’s important that you speak with each other and decide who takes on what, debt-wise.

What’s more, if you helped your spouse pay down debt before the wedding and are looking to get your money back, think again.

According to Tayne the general rule is, “Unless you had something in writing that said it was a gift, you’re not entitled to any money back. I suggest always that you keep pre-marital debt separate and not consolidate into both names.”

It will also be important that neither of you sign on to new debt once you decide to get divorced. This new debt will fall into a category called “marital debt” and could be something you’re both on the hook for.

3. Get original copies of financial statements

As you and your future ex-spouse talk about your joint finances, make sure you both have original copies of everything for documentation and clarity.

If there aren’t enough, make copies of the originals you have and reach out to the agencies you worked with – financial or otherwise – to see if they’ll send you another set of originals. You may also be able to find some of your financial statements online.

As you sit down and go through all of your financial accounts and statements together, don’t leave any stone unturned. If you’re not sure where to begin, Bedrock Divorce Advisors has a financial checklist you can review to help you keep track of what you need to gather.

4. Don’t try to hide anything

When you’re dealing with divorce and debt, don’t hide anything. Maybe you had a loan you were hoping to pay off before your spouse found out. Or a credit card you forgot about that still carries a balance.

Remember to disclose everything – even accounts that are in collections. If you don’t disclose it to your spouse and you end up in divorce court, you’ll have to disclose it in an affidavit:

“A financial affidavit is a formal document often required during divorce litigation in which you provide details of your financial situation. Afterward, you sign the document, verifying its truthfulness, then file it with the court. Therefore, any lies, omissions or misrepresentations you may have been sworn under oath to the court, just like when you testify.” – LegalZoom

If you decide to lie on a financial affidavit during your divorce, LegalZoom states you could face repercussions ranging from a verbal reprimand from the judge to financial penalties and jail time.

While it may not be easy to admit to hidden debt, it’s probably not worth the risk.

5. Understand what “marital debt” is

Remember your two lists of debt accounts? Here’s where they come into play.

It’s important to understand that “marital debt” is all of the debt you acquired during your marriage. However, it’s not always the same as joint debt – debt that you and your partner take out in both of your names.

When it comes to marital debt, it doesn’t matter if the debt was only in your spouse’s name – you could still end up on the hook for it. It all depends on how your divorce proceedings go and the settlement you all decide upon.

To make matters more confusing, Tayne outlines how this rule applies differently based on where you’re getting divorced:

The rules of ‘marital debt’ can also be different in every state. For example, if you live in a community property state, you may have to split up your finances 50-50 after your marriage (regardless of who earned it). Laws are also different if you live in an Equitable Distribution State.

Because of the confusion, Tayne recommends understanding which laws applies to you before filing for divorce (or as soon as possible) so that you are aware of what happens with you and your partner’s finances and debt.

6. Don’t think you’re off the hook

Here’s the thing about marital debt: even if your partner agrees to pay all of it after the divorce, you’re still responsible for it if it remains in your name.

If your ex stops making payments any time after the divorce proceedings, your creditors will still hold you liable for the debt in your name. You could fight your ex in court over it, but that won’t stop the defaulted payments from hurting your credit.

Just remember this one simple rule: debt in your name will affect your credit no matter what.

Dylan Ross, CFP®, AFC®, Garrett Planning Network, explains that just because a court orders one person to become responsible for a joint debt doesn’t mean the other person is off the hook.

“A divorce order is between the formerly married couple, but a joint debt from a contract between the couple and the lender, who was not party to the divorce order, is not changed by the court’s order,” Ross says. “That also means it will continue to appear on both credit reports.”

If a debt is in your name and your spouse agrees to take it on in the divorce settlement, check the account each month to make sure those payments are being made. You’ll want to know sooner rather than later in order to avoid a default hitting your credit report.

How to make sure your divorce doesn’t lead to debt

Let’s say you get this far without any issues. There are still a few steps you should take to ensure that your divorce doesn’t suddenly lead you to debt.

1. Divorce doesn’t always have to involve lawyers

The act of getting a divorce can be incredibly expensive. A survey done by Nolo found that the respondents paid an average of $15,500 for their divorce.

If you want to avoid paying almost half of the cost of the average wedding for your divorce, you can file for an uncontested divorce. According to, an uncontested divorce occurs when:

(a) there are no disagreements between you and your spouse over any financial or divorce-related issues (i.e., child custody and support, division of marital property or spousal support); and (b) your spouse either agrees to the divorce, or fails to appear in the divorce action.

An uncontested divorce saves you time and money battling it out in the courtroom. That’s why this can be a really great way to make sure your divorce doesn’t send you both into debt. However, gives one warning about this:

“You may sue for divorce thinking that the proceeding will be uncontested, but discover later that your spouse has decided to contest (‘fight’) the case.”

If that happens, you’ll have to either represent yourself in court or have a lawyer represent you. In the end, if you fear that your spouse might take advantage of you, go ahead and work with a lawyer. After all, there can be risks with a “do it yourself” divorce.

Divorce startup WeVorce cautions risks for this type of divorce include unknowingly getting into an unfair agreement, settling too early, or slowing down the case due to lack of legal knowledge.

2. Beware tax implications of certain settlements

If you receive a settlement in your divorce, find out if there are tax implications. In other words, depending on a variety of factors such as what you receive in your settlement (especially property or assets), you may end up owing taxes on these items.

The last thing you need after a stressful life change such as divorce is to find out a year later that you’re getting hit with a huge tax bill. If you’re working with a lawyer, go over all the details of the settlement and if parts of it might be taxed so you can be prepared.

3. Make sure your spouse is paying their portion

This point is worth mentioning twice.

If your spouse has agreed in the divorce proceedings to take on some of your marital debt, make sure he or she is really paying it. Log into those accounts and check each month.

Again, your creditors will come after you if your name is on a debt that’s going into default. Don’t let this happen to you.

4. Stay on top of your credit report

Another way to make sure your divorce isn’t causing damage to your credit report is to stay on top of it. You can get your credit report from all three credit reporting bureaus for free each year through

Review the items on your credit report to make sure that they are all, in fact, things that occur in your name. Then search for any delinquencies.

Delinquencies on debt your ex agreed to take on could mean they stopped making payments. If that happens, get in touch with your ex and your creditors immediately to resolve the situation.

5. Create a rock-solid solo budget

Now that you’re starting over, you’re going to need a budget to match.

“I can’t stress enough how important it is to budget and take control of your finances post-divorce, especially if your partner has been in control of your finances your whole marriage,” Tayne explains.

If you were in charge of your budget during the marriage, this step might seem like a breeze. However, there are a million ways our finances can become tangled with our spouse’s. And we may not notice until we’re on our own again.

Tayne also mentions that many divorcees don’t think about the changes that are coming to their budgets – or how they’ll soon be living on less income. You can prevent this shock by getting ahead of it.

Start by writing a list of income and expenditures. Then create a budget to make sure what’s you’re spending doesn’t surpass what you’re bringing in.

Then create a new plan for your long-term financial goals now. Just make sure you’re planning for it and not falling into an impulse-laden financial freefall.

Divorce and debt don’t have to spell disaster

There’s no question that adding the stress of debt to the process of divorce can feel like a disastrous combination. But it doesn’t have to be that way.

Follow these 11 tips and cover all your bases so you can bring this chapter of your life to a close and move forward, stress-free.

And if you need additional help, don’t hesitate to seek legal counsel you trust. Sometimes it’s worth spending a little money to protect your future.

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LenderAPR RangeLoan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.990% APR to 16.240% APR (with AutoPay). Variable rates from 5.75% APR to 14.60% APR (with AutoPay). SoFi rate ranges are current as of March 18, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 5.75% APR assumes current 1-month LIBOR rate of 2.50% plus 4.28% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. SoFi Personal Loans are not available to residents of MS. Maximum interest rate on loans for residents of AK and WY is 9.99% APR, for residents of IL with loans over $40,000 is 8.99% APR, for residents of TX is 9.99% APR on terms greater than 5 years, for residents of CO, CT, HI, VA, SC is 11.99% APR, and for residents of ME is 12.24% APR. Personal loans not available to residents of MI who already have a student loan with SoFi. Personal Loans minimum loan amount is $5,000. Residents of AZ, MA, and NH have a minimum loan amount of $10,001. Residents of KY have a minimum loan amount of $15,001. Residents of PA have a minimum loan amount of $25,001. Variable rates not available to residents of AK, TX, VA, WY, or for residents of IL for loans greater than $40,000.
  5. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  6. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

2 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.

3 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.79% – 20.89% (6.79% – 20.89% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

5 Important Disclosures for LendingPoint.

LendingPoint Disclosures

  • Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary based upon LendingPoint’s proprietary scoring and underwriting system’s review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 6% may apply depending upon your state of residence. Upon LendingPoint’s final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. LendingPoint makes loan offers from $2,000 to $25,000, at rates ranging from a low of 9.99% APR to a high of 35.99% APR, with terms from 24 to 48 months. The loan offer(s) shown reflect a 28 day payment cycle which is being offered as a courtesy as many of our customers are paid on a biweekly schedule and thus this may better align the loan payment dates with your actual income receipt schedule.

6 Important Disclosures for LendingClub.

LendingClub Disclosures

All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.95% to 35.89%*. The origination fee ranges from 1% to 6% of the original principal balance and is deducted from your loan proceeds. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at the time of application. The average origination fee is 5.49% as of Q1 2017. In Georgia, the minimum loan amount is $3,025. In Massachusetts, the minimum loan amount is $6,025 if your APR is greater than 12%. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the website. All loans via LendingClub have a minimum repayment term of 36 months. Borrower must be a U.S. citizen, permanent resident or be in the United States on a valid long term visa and at least 18 years old. Valid bank account and Social Security number are required. Equal Housing Lender. All loans are subject to credit approval. LendingClub’s physical address is: LendingClub, 71 Stevenson Street, Suite 1000, San Francisco, CA 94105.

†Per reviews collected and authenticated by Bazaarvoice in compliance with the Bazaarvoice Authentication Requirements, supported by anti-fraud technology and human analysis. All reviews can be reviewed at

**Based on approximately 60% of borrowers who received offers through LendingClub’s marketing partners between January 1, 2018 to July 20,2018. The time it will take to fund your loan may vary.

7 Important Disclosures for Earnest.

Earnest Disclosures

  1. Earnest does not lend in Alabama, Delaware, Kentucky, Nevada, or Rhode Island.

8 Important Disclosures for Avant.

Avant Disclosures

* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.

** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Your loan terms are not guaranteed and are subject to our verification and review process. You may be asked to provide additional documents to enable us to verify your income and your identity. This rate includes an Autopay APR reduction of 0.5%. By enrolling in Autopay your payments will be automatically deducted from you bank account. Selecting Autopay is optional. Annual Percentage Rate is inclusive of a loan origination fee, which is deducted from the loan proceeds. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. All loans made by WebBank, member FDIC. Please refer to Upgrade’s Terms of Use and Borrower Agreement for all terms, conditions and requirements.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

5.75% – 16.24%1$5,000 - $100,000

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7.69% – 35.99%$1,000 - $50,000

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7.99% – 35.89%*$1,000 - $50,000

Visit Upgrade

5.99% – 24.99%2$5,000 - $35,000

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5.99% – 29.99%3$7,500 - $40,000

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6.79% – 20.89%4$5,000 - $50,000

Visit Citizens

9.99% – 35.99%5$2,000 - $25,000

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6.95% – 35.89%6$1,000 - $40,000

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6.99% – 18.24%7$5,000 - $75,000

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9.95% – 35.99%8$2,000 - $35,000

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