How to Deal With Debts After a Divorce?
A divorce is never an easy thing to deal with, especially if you face debts because of it. Here’s how you can get your debts in order and manage your mindset during this time.
Why do divorces happen?
Around one in three marriages in England and Wales end in divorce, with the average overall rate being 33.3%, so its likely that some of these divorces could be down to debts such as struggling to repay credit cards, or a loss of home or car and other possessions. Most of these divorces (43.6%) happen after 30 years of marriage.
Sometimes a divorce can happen due to unhappy marriages, growing apart, or even separating from an arranged marriage.
What should you do first?
Take time to understand your feelings and process what is happening. When you feel ready, prioritise your debts in order of most important and aim to cover them off in chunks. A lot of debt companies may be lenient with you if they understand that you are going through a difficult time, so it’s important to reach out and take any help that is offered if you can do.
How can you reduce your debts and improve your credit score?
Prioritise your mortgages, council tax and bills as these are the debts that can have the most impact on your credit score and leave you in a worse position if they aren’t paid. You could risk being taken to court or even losing your home.
If you don’t have enough money to keep on top of every payment that follows after these, prioritising your debts will help you understand what you can and can’t afford to pay at the moment.
Once you’ve covered your basic debts, you should take a look at sorting out any loans you have taken out and paying off some, if not all, of your credit card debt as this will boost your credit score.
If you and your ex-partner had any joint debts, you should aim to be civil (where possible) and work out a best-case scenario where you can both make these repayments. In situations where your partner refuses to pay, you might be liable for repaying the full amount so be prepared for this outcome if the marriage ended on a sour note. Some debt collection companies will help you to work towards a manageable agreement and accept a lower payment if you can’t manage the repayments in full.
Once you’ve paid off these debts, you can take out a new loan to help further boost your credit score. Taking out a loan to pay off other existing loans can be a good solution, if you take out a secured loan with an asset you already own such as a house or a car as collateral.