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5 steps for handling debt during divorce

It is no secret that a divorce, if not properly and fully planned out, can have an adverse affect on the separating spouse's finances, both at the time of the divorce and in the future. One major area of contention that can be difficult to properly address in Colorado divorce proceedings is debt. However, following five pre-divorce credit and debt repayment planning steps should greatly improve the financial situations for both parties and make for a smoother separation.

First and foremost, separating spouses should ascertain exactly which accounts belong to which person. Each spouse can then remove their name from the list of authorized users on the other spouse's account, or that spouse can freeze a joint account and create his or her own. Then, if possible, try to minimize -- or eliminate -- any joint debt to save from any complications further down the road.

Next, make sure that every single account in which both persons' names appear has been closed, even those that are no longer used by either individual. Then, if either spouse agrees to assume one or more debts, make a balance transfer that will hold that person accountable for his or her word. Finally, take all measures necessary to ensure that any and all loopholes are accounted for.

By following these five steps, it should help the separating Colorado spouses have a more amicable divorce, since their debts will be properly handled. However, it can prove difficult to successfully complete all five steps alone. Luckily, help sorting financial debts and making sure that each spouse gets his or her fair share is available in our state for those who seek it.

Source: Fox Business, "Debt and Divorce: 5 Steps to Make a Clean Credit Split", Dawn Papandrea, July 14, 2014

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