For many couples, money can be a source of conflict and angst. In some cases, financial differences or struggles can even contribute to the irrevocable breakdown of the relationship. For married persons, this leaves them facing the challenge of figuring out how to split their debt as part of their property division agreement. Many people only think about splitting assets, but it is equally important to pay close attention to how your debt is apportioned during your divorce. Depending on the choices you make, the health of your future credit history may be on the line.
Money Management International explains that creditors pay little to no attention to the terms of your divorce agreement. What they do pay attention to is whose name or names are on an account. It is the person or persons named on any account that a creditor deems as liable for the debt. This means if your spouse is supposed to pay a particular credit card debt per the terms of your divorce, but you allow your name to remain on the account, the bank could pursue repayment from you if your spouse fails to make a payment on time or does not pay the minimum required amount.
Another scenario you should be aware of is that any late or missed payment on the part of your spouse for an account they were supposed to pay could be reported on your credit history if your name is still on the account. It is clearly important for you to get your name off any account your spouse is responsible for.
According to SoFi, it is equally important is for you to clearly establish the date after which any debts incurred by either party are your sole responsibility.