Ohio Residents, Divorce, and Debt Management

If you are a Cleveland, Cincinnati, or Columbus, Ohio resident who has just filed for divorce, you are likely facing emotional distress. However, you might also be facing debt and credit problems, or might be facing the prospect of losing your housing because of the divorce. What should you do? Before you panic, consider enrolling in a debt management program and some credit counseling sessions through Advantage CCS.

What divorce can do to your credit, your debt management abilities and your housing situation

 Divorce is never easy. And from a financial standpoint, it can be one of the toughest periods of a person's life. If you and your soon-to-be-former spouse were like most couples, you were living on two incomes, which have become increasingly necessary to run a financially solvent Ohio household. Books such as The Two-Income Trap by Elizabeth Warren and Amelia Tyagi examine this reality in depth (one famous and disputed concept from this book is, “Having a child is the single best predictor of bankruptcy”), while newspapers from the New York Times to the Cleveland Plain Dealer publish regular editorials about the financial difficulties of running a household in the 21 st century.

Because of your pending divorce, you will be going from two incomes to one income – but will still need money to pay off credit card and housing debts and to afford basic daily essentials. Your expenses might not change significantly. Worse, you might be paying alimony or child support to your former spouse, depending upon the outcome of your divorce proceedings. These financial risks are good reasons to embark upon a debt management plan proactively rather than reactively.

Joint debt management before your Ohio divorce

If you and your spouse have shared debt – be it housing debt or student loan debt that became joint debt as a result of marriage – it is often best to settle it before the divorce proceedings are finalized. Common debt management sense proves that hidden debts can be disastrous in marriage – and paying down debts you never knew existed become more challenging still during divorce proceedings! Your best bet is to have an honest discussion with your spouse about what debts you each owe, and how you will split or pay down debts before and after the divorce. If civil discussion is not possible, consider enlisting help from a mediator or lawyer. Large cities like Cleveland, Columbus, and Cincinnati, OH have legal services and outlets for individuals of limited means.

Housing debt can be a particularly difficult issue to settle, especially if you and your soon-to-be-former spouse still owe many mortgage payments. One option might be to refinance your joint housing so that only one party is responsible for mortgage debt payments. Another option might be to sell the home, and split any money resulting from the sale between you and your spouse. A third option might be to decide who will live in the house and be responsible for mortgage debt. Mediation can help settle this – and the spouse who takes over the house and the housing payments might find that renting out rooms can help to generate additional income. The most important issue in housing debt management is this: The debt doesn't go away. SmartMoney advises that if the “who-is-paying-for-what” factor is not settled prior to your divorce being finalized, one party can be held financially liable for the other party's failure to make payments.

Get a credit report and a debt management program – but make bankruptcy your last resort.

You and your spouse should each get a free credit report prior to divorce. One or both parties could have credit errors on the reports, and correcting these errors is key to an amicable financial split. You do not want to wind up paying off your spouse's credit card debt or student loan debt if you don't have to. A clean and accurate credit report can save each party from hassle and headache later on. If you find that your credit score is low, you should consider enrolling in online credit counseling through Advantage CCS. A strong credit score is a smart way to begin your life anew, post-divorce.

Consider pairing credit counseling with a debt management program. Advantage CCS counselors can assist individuals in the Cleveland, Cincinnati, or Columbus, Ohio areas with debt management strategies. You can attend group counseling sessions, or enroll in one-on-one debt management sessions with your counselor. There, you will be able to examine your debt-to-income ratio and begin to adjust your lifestyle to account for your new income (and any debts owed, post-divorce). It is possible -- and sometimes simpler than you think – to adjust to a single income during a divorce. A smart debt management plan will help you to endure divorce without amassing additional debts.

Filing for bankruptcy should be a last resort. You must enroll in bankruptcy counseling prior to filing. Fortunately, Advantage CCS counselors can help Ohio residents determine whether bankruptcy is the best plan-of-action from a debt management perspective.

Divorce can be one of the most mentally and financially distressing events in life. Strategic debt management and credit counseling options can help alleviate the downsides of divorce.