Follow Us on Facebook Follow Us on Twitter Follow Us on Google+ Follow Us on Pinterest Follow Us on Tumblr Visit our YouTube Channel Subscribe to our Feed Subscribe via FriendFeed

Connect With Us

The Effect Of Separation Or Divorce On A Joint Debt Management Plan

by on July 30, 2012

in Debt Management

Post image for The Effect Of Separation Or Divorce On A Joint Debt Management Plan

Married couples commit to each other for better or worse and getting into debt falls into the second category. Many married couples enter a debt management plan jointly because both parties bear responsibility in amassing the debt. If the relationship goes bad and the couple decides to separate or divorce, this will impact the debt management plan.

Financial issues can cause problems in a relationship. Being in debt or living on restricted finances due to debt repayment can break a couple apart. It is not unusual for splitting couples with a joint plan for debt management to request help from a debt expert. Couples who are joint homeowners typically wonder if the way property is handled following separation or divorce will affect the handling of a debt management plan.

While formal insolvency measures such as bankruptcy or an Individual Voluntary Arrangement consider equity in the home, a debt management plan does not. If the couple elects to sell the home, the proceeds can be used for any purpose desired. The money is not required to be applied to the plan. However, if a profit is made on the home sale, this creates an opportunity to end the plan early through an offer to settle debts with a lump sum payment. A separating or divorcing couple may view this as an attractive option because it provides them with a fresh financial start.

For those who do not have enough home equity or are not homeowners, this early repayment option typically does not exist. Each person is likely to face increased expenses due to living on his or her own. Therefore, the repayment established for the plan must be reduced, extending the plan term. The company handling the plan will inform creditors about the new situation or may recommend an alternative way to repay the debt more quickly.

Did You Realise?

By filling out our QUICK & EASY FREE DEBT HELP FORM you can be certain of friendly debt assistance, which can give you peace of mind and confidence that a resolution to your debt issue is, in fact, possible.

Some couples part amicably and are willing to continue their joint plans after separation or divorce. However, experts warn against this, instead recommending the establishment of individual plans. The reason is the resentment that often develops regarding allocation of payments, one person failing to make the required contribution, privacy, or data issues. With separate plans in place, an ex-couple avoids these issues and can focus on repaying their debts rather than arguing with each other about the plan.

Separation or divorce is never a happy situation but it is also not the end of the world. Former partners can exist happily individually, each taking care of individual debts. Once they have repaid the money due, they may have a new perspective on life and be ready to re-enter the dating world. The important thing is that they avoid accumulating any more debt.

Since a plan for debt management can continue after a separation or divorce, a couple need not stay together for relevant financial reasons. Couples who are considering splitting should contact a debt expert to get more information about the effect on their plan. This professional should be able to answer any questions and address all concerns they have.

How can you QUICKLY Clear Your Debt?
Try our FREE Debt Assessment to find out.

Previous post:

Next post: