Don’t Overlook Debt and Credit Rating Issues
No one wants to start over with bad credit. Several steps can be taken during the divorce process to minimize the chances of this occurring.
The parties should obtain a copy of their credit report. This will identify all joint accounts, accounts one party may not know about, and any potential credit problems.
If possible, the spouses should pay off and close all joint accounts prior to the divorce settlement and open new accounts, each in his or her own name. Unfortunately, creditors don't care how a separation agreement divides responsibility for joint debt (joint credit cards, auto loans). Each person is liable for the full amount of debt until the balance is paid, hence the importance of dealing with this issue prior to a divorce.
Regarding income tax debt, even if the divorce is final, a former spouse may not be exempt from future tax liability. For three years after the divorce, the I.R.S. can perform a random audit of a divorced couple's joint tax return. If it has good cause, the I.R.S. can question a joint return for seven years.
A divorce agreement should have provisions that spell out what happens if any additional penalties, interest, or taxes are found as well as where the funds come from to pay for any expenses associated with an audit.
Useful Online Tools
Separation Agreement Software
Resources & Tools
DIVORCE AND COLLEGE -- Divorcing spouses should consider the terms and conditions of any college expenses, including out of pocket expenses. Both parents and children are better served when this is decided at the time of the initial settlement agreement, even if the children are very young.
Easily Connect With a Lawyer or Mediator
Have Divorce Professionals from Your Area Contact You!
Online Divorce Negotiation
So you and your spouse have a few issues to iron out before you can agree on your divorce? You are not alone, but you do not have to spend thousands on a lawyer to reach an agreement. With just a little participation and communication, you will be surprised how easy it is to resolve your disputes through our innovative Divorce Negotiation CenterTM. It's FREE. Give it a try.
Basic Principles of Law for Construing Separation Agreements
Established in 1996
© 1996 - 2021 Divorce Source, Inc. All Rights Reserved.