Divorce brings huge changes to your life, especially your finances. There’s a chance that you may have less funding and assets to support the same lifestyle as you did before.
When couples divorce, courts also divide debts between spouses, not just assets and bank accounts. However, this division doesn’t always protect you from your former partner’s creditors.
Why debt collectors may contact you after divorce
A debt collector can contact you about a debt if your name is still on the loan agreement. Having your name on the official documents means you are still legally responsible for the loan.
The divorce decree may specify the assets and debts under your ex-spouse’s name. But these do not change your responsibility to the creditors because the names on the debt documents are not updated automatically to reflect the change in the relationship.
Creditors can pursue anyone whose name is still on the original contract. In most cases, you remain responsible for joint debts unless the creditor releases you or your ex-spouse refinances the loan.
Protecting your assets from creditors
There are different strategies can help shield your assets from both your own creditors and your former spouse’s creditors. Some are:
- Asset protection trusts: A domestic or offshore asset protection trust protects assets from creditors since these are under ownership of the trust instead of you.
- Prenuptial agreements: A prenuptial or postnuptial agreement allows you and your former spouse to set clear lines on finances.
- Financial separation: Keep separate bank accounts and avoid commingling assets to prevent creditor access.
These protection tools work best when implemented early and maintained consistently throughout the marriage.
Seek professional help to protect finances
Your former partner’s creditors can pursue you if your name stays on joint debts after the divorce. Sending creditors your divorce decree doesn’t end your responsibility for joint accounts. Removing your name from home or vehicle titles doesn’t remove your name from mortgages or auto loans, either. Working with an experienced divorce attorney during the proceeding may help prevent these problems and protect your post-divorce finances.
