Managing Money

The Financial Challenges of Debt and Divorce: 28 Experts Respond

debt and divorce
Written by Steve Horton

Many people going through divorce also take on enormous amounts of debt to see it through. We talk to 28 experts about how to manage debt and divorce.

Divorce can be one of the most emotionally painful experiences that anyone can experience, but it can also lead to significant financial issues. The cost of the divorce itself, including attorneys; taking on additional debt to pay for those costs; transitioning to a single-income household, and so on. We’ve spoken to 28 experts ranging from family financial planners to divorce attorneys and asked them about debt and divorce:

What are the most significant financial challenges associated with divorce, and how do you overcome them?

Divorce doesn’t have to be a financial disaster. Take this advice to heart and find out what works for you.

Credit Card Insider

Divorce, By Itself, Doesn’t Affect Your Credit

Your credit reports don’t show whether you are married or divorced. Credit reports will, however, show any joint credit accounts you share with a spouse. Joint mortgages, auto loans, credit cards, or other credit products can make divorce more complicated financially.

Make Your Payments on Time

As you go through separation or divorce, you’ll still be expected to pay your bills on time. If you must, create a schedule or other agreement on who will pay which bills. Paying a bill late or missing a payment entirely can reflect on your credit for seven years, so it’s best to make sure that all your monthly obligations are covered.

On shared credit accounts, it can be difficult to determine who is responsible for the bill. In the case of a joint credit card, both cardholders are legally responsible for the debt, regardless of who spent the money.
In the case of one partner being an authorized user, the primary cardholder is legally liable for paying the credit card debt.

Avoid Applying for New Credit

Applications for new credit will appear on your credit reports. This is called a hard credit inquiry. In the wake of a divorce, you may feel the need to build up your own credit profile quickly. Avoid rushing and applying for many credit cards at once. Applying for a bunch of cards at once may signal risk to lenders, and can hurt your credit scores.

While one or two hard inquiries can hurt your credit scores, it usually won’t impact your scores by much or for very long. More than about four hard inquiries per year can make it more difficult to apply for some credit products.

Greg Mahnken

The Money Manual

When people talk about the financial consequences of divorce, most people focus on assets. Who is getting the house? Who is getting the car? How are cash and investments going to get divided? That’s certainly something to think about (and worry about), but what a lot of people fail to realize is that debts have to be divided, too. Credit card debt, mortgages, car loans – all that needs to be split.

Laws on this vary state by state, but generally, the courts try to divide debts and assets equally, and that’s where the horror stories start. I heard a story once of someone whose ex had racked up thousands of dollars of credit card debt that she had no idea about, and she ended up with the debt following the divorce. I had another person tell me that even though his ex-wife was made responsible for a car loan following the divorce, when she was unable to pay it, he was also on the hook for it because it was joint debt (companies don’t care about divorce, they just want to be paid).

I can’t stress enough how important it is to understand the family finances while you are married. If your partner is spendy and loose with getting into debt, you could end up sharing the financial consequences in a divorce.

And, if you are heading into a divorce, the absolute best solution to the debt issue is to pay off all the debts before finalizing your divorce. This is easier said than done, but the next best thing you can do is to get rid of all joint accounts. Refinance the house, car, and other loans in one person’s name. Get rid of shared credit cards. And fully go your separate ways.

Leah Bourne

RE/MAX Executive Realty

When getting a divorce, there is quite often a marital home that needs to be dealt with. There are a number of scenarios that can happen when a breakup occurs, including a liquidation of the asset or one of the spouses keeping the home.

For those going through a divorce, there are a number of financial considerations. One of the most significant things for both parties to think about is affordability. If both parties were a major contributor to the mortgage, can one afford to do it one their own? Even if they can, would they be financially strapped?

Couples going through a divorce need to be sensible doing what’s best, not doing something that harms the other party for spite. Quite often, one party wants to keep the house at all costs, even if it doesn’t make financial sense to do so.

Another consideration to consider is taxes. If you happen to have significant capital gains from the property, selling while married could make a lot of financial sense. When married, couples are able to exclude up to $500,000 from capital gains.

Bill Gassett

Think Save Retire

I would imagine that the downsizing aspect of getting a divorce would be the hardest part—especially going from two incomes to one, or one income to none if only one of the spouses was providing for the couple or family.

To overcome this challenge, it all comes down to being extremely realistic about your budget and what your needs vs. wants really are. Aside from splitting up your assets and taking on two completely separate living expenses, the act of actually going through the divorce can be financially crippling on its own.

In life in general, going to court isn’t cheap, and the same goes for involving a lawyer—those hourly rates are serious stuff. As much as the couple splitting up can agree on terms of their separation, the more they’ll save on legal advice or actual time spent in court. (Luckily, I have only experienced this second hand.)

Melissa Hollis

Sure Dividend

Divorce is, for better or worse, a time of massive change. In the chaos of divorce, it’s easy to become reckless with your investments. In many cases, significant liquidations and transfer of assets occur.

In this turbulent time, it’s important to remember that your investments and the broader market don’t care about your divorce. Meaning, as hard as it may be, it’s critical to stay the course with your investments during times of serious emotion, and not give in to the temptation to take more risks with your investments.

Ben Reynolds

Divorce and Your Money

  1. Understanding Their Financial Picture: Many times, one spouse does not have a clear understanding of their finances. This may include understanding their assets, their debts, and how much they make and spend each month. Without having a clear picture of what a divorcing person has and owes, it can be overwhelming trying to decide how to negotiate during the divorce process.
  2. Deciding What Assets to Keep – and What to Give Up: Frequently, certain assets like a house or a retirement account may have sentimental value, but may not be the best financial decision to make for your future. It is also essential to understand any tax considerations a person may face, as different assets have different tax implications. By failing to understand taxes, someone may end up with much less money than they think.
  3. Keeping the Long-Term In Mind: While divorce may be the only area someone can focus on, it is essential to consider their life after divorce is over. What do they want? Where do they want to live? How do they want their kids to be raised? If there is a clear picture of the future, the decisions made during the divorce process can help achieve their long-term goals, rather than regretting decisions years after the divorce is over.

Shawn Leamon

Pacifica Wealth

One of the most common financial challenges of those who recently went through a divorce is trying to regain their financial footing. A divorce, even the most cordial ones, is still traumatic. At the end of the day, a divorce represents a loss, and this loss can turn people’s lives upside down emotionally but also financially.

Typically, post-divorce, you are left with just 50% of what you had pre-divorce. To make matters worse, you may have had two incomes, and now that may just be one. The important thing is to develop relationships with professionals such as a financial advisor, CPA, and attorney. You need good financial, tax, and legal advice. Basically, you need a good team of people around you that have your back and that can work with you to get on your feet, by helping you creating a financial strategy for your future.

Robert Pagliarini


One of the biggest challenges my clients face are the financial consequences of divorce. Even the issues with minor children are tied to financial concerns, such as parents having to work longer hours to make ends meet and not spending as much time with the children.

They are essentially dividing one household into two, so there are less resources to go around, since they are now having to pay for two residences and all that entails, separate health insurance, extra childcare, the list could go on.

Many families soon realize that they cannot go on with the same standard of living they maintained in the marriage. It’s a tough pill to swallow for many. But oftentimes this change in lifestyle can be turned into a positive, and their newfound financial independence leads to positive wealth building.

Divorce mediation is powerful, in that it’s the parties themselves that determine the outcome. They decide how to divide the house and 401(k) in a way that will best serve them. Since the agreement is dictated by them, the terms are respected and carried out. The acrimony is decibels lower than a traditional divorce. This creates a pattern of openness and healthy communication that can make what once looked like a desperate situation into an entirely manageable one.

Dori Shwirtz


Insurance is a major change for anyone who gets divorced. Both households will have to maintain separate health insurance policies, and if children are involved, there will have to be a decision on which policy will handle their coverage.

Other Insurance coverage will also increase. There will be fewer multi-policy discounts, and married people tend to have lower auto insurance rates than those that are single.

Paul Moyer

Finance Superhero

Divorced people face the enormous challenge of navigating an unplanned financial course correction. Obviously, nobody plans a divorce when they marry.

This can be emotionally deflating, and can often set back an individual by several years in their financial journey. Overcoming this hurdle isn’t easy, but taking the time to reframe priorities and forming a plan to account for changed circumstances is key.

David Cahill

Law Offices of Thaddeus M Bond Jr

One of the biggest financial issues we see in a divorce is dealing with a mortgage on a home purchased during the marriage. The parties often decide that one of them will keep the home, possibly as the best place to raise the children. However, the mortgage was taken out jointly, and both parties remain 100% responsible for the entire debt. Your lender will not be bound by any agreement you reach with your spouse in a marital settlement agreement.

If one party wants to keep the marital home, the other party should insist that the property be refinanced, so that the person who will stay takes on all liability for the mortgage, property taxes, insurance, utilities and maintenance. Otherwise, the spouse who leaves will have future liability exposure if their ex defaults on the payments.

Ted Bond

The D-Word: Divorce Through a Child’s Eyes

One major financial challenge is paying for the divorce itself. This typically isn’t an expense people budget for, and it can easily cost tens of thousands of dollars.

Couples can save money by employing a more productive process: negotiating between themselves or using a mediation or a collaborative process, instead of negotiating through attorneys and litigating the divorce.

Generally speaking, the more cooperative and the more couples talk to each other, the less they’ll pay lawyers to talk for them.

Another thing, and it sounds counter-intuitive, is to save money by using more professionals. Many people use attorneys for everything they can, but often there are other professionals who are better-suited to handle specific issues, and they often charge less. Examples include therapists, coaches, mediators, real-estate professionals, financial planners, CPAs and CDFAs.

Tara Eisenhard

Physician Wealth Services

People facing divorce might face a significant financial impact, and at a minimum are going to have to face financial adjustments. For people that relied on their spouse to handle bill-paying and money decisions, it can feel even more overwhelming to take on these responsibilities while dealing with other life changes. One of the biggest financial issues that can come up is child support or alimony. If you are taking custody of your children, consider the additional expenses you will have if you are paying for all their basic needs, healthcare expenses, and extracurricular activities.

You should also consider how costly a divorce itself can be, and protect yourself financially from racking up a lot of legal fees. You can overcome these challenges by taking control of your finances and planning ahead. Usually, a divorce does not happen overnight, and although it can be stressful and emotional, take the time to inventory your household assets and create a budget for the new normal of what your future household income and expenses will be.

A divorce will allow you to start fresh both financially and emotionally. Do your homework and educate yourself to determine what will make you happy and allow you to lead your best life.

Ryan Inman

My Journey to Millions

I would say the first and one of the biggest challenges that divorced people face will be the legal fees to actually obtain the divorce! Paying two attorneys gets expensive quick. The way to overcome the challenge would be to mediate whenever possible.


Wealthy Nickel

One financial challenge divorced people face is the added household expenses of living separately. While married people only need one house, and can combine insurance policies, phone bills, etc. to get reduced rates, when you are divorced, all the financial burden for these expenses falls on you.

Outside of the emotional stress of a divorce, the financial stress caused by divorce can be hard as well. But being divorced doesn’t mean you will always have to live behind the financial curve. Learning how to readjust to a slightly lower standard of living (like a smaller house or less expensive car) can help address this challenge. By finding ways to save money and live within your means, you can regain your financial footing and get your monthly budget and retirement savings back on track.

Andrew Herrig

How to FIRE

A divorced person will face many challenges as they begin to manage their finances on their own. After child support, alimony, and division of property are settled, they will need to assess their new situation. They will now have less income and differing amounts of savings and debt from what they had previously.

To overcome these challenges, a divorced person will need to begin by creating a new budget. They’ll need to pay for all living expenses on their own. So, it may require them to try to increase their income or significantly scale back their lifestyle. Additionally, it’s also essential to come up with a plan to pay off their debt, if they have any.

Many divorced people will need to open new bank and investment accounts, because they previously had joint accounts with their ex-spouse. This step will allow them to start making financial decisions on their own during this new chapter of life.

Most importantly, divorced people will need to determine their new financial goals. Whether paying off debt, saving an emergency fund, or stockpiling wealth for retirement, all their previously set goals will need to be changed. It’s a fresh start. Resetting your financial plan will give you a new perspective on your future. Maybe you’ll even be able to pursue a new journey to financial independence and early retirement (FIRE).

Sam Hawrylack

Vacca Family Law Group

One of the biggest financial challenges is how to provide health insurance for a spouse that doesn’t have it available from their own employer. One option that I often see, especially with older couples, is that they will negotiate and sign a separation agreement but will stay legally married for several years to maintain insurance coverage until Medicare kicks in.

This is because once the judgment of divorce is finalized and entered, the spouse with insurance coverage through employment can no longer cover the other spouse. Their spouse can go on COBRA for up to 36 months, but it will be very expensive ($800/month seems to be the new average cost that I’m seeing), but not as expensive as buying insurance on the open market and then paying for all of the out-of-pocket costs that won’t be covered by those plans. Even clients who are leaving the marriage with many millions of dollars are seriously concerned about not having sufficient insurance coverage.

Thinking about possible changes in circumstances that take place after the divorce is also a financial challenge. How do you address the possibility of losing a job? Or someone becoming disabled? Or someone who always dreamed of early retirement but now feels trapped in a job they hate?

Serious illness of a parent or a child can upend an intact family due to medical expenses and the possibility that one parent can no longer work. Thinking about how to handle these things as a divorced couple is important too.

A big picture issue: how will you support two households on the same amount of money? Will you both downsize to smaller homes? Can you both own, or will you be renting? People live right up to their means (if not beyond their means) when they are together and when they separate, there is often not enough to keep the same types of homes.

How do you maintain the family’s lifestyle? Parents feel so much guilt for divorcing and causing upheaval in the kids’ lives. They are loath to take extracurricular activities away that provide the kids with an escape and enjoyment. But many of these activities can be very expensive. Activities such as ballet, gymnastics, hockey, horseback riding, fencing, traveling sports teams can cost a great deal depending on the level at which the child is involved. Parents will have to negotiate how to pay for these activities in the short term and long term. Private schools may also have to be re-examined.

Vacations also become a financial stressor. I often see parents in the first year or two of separation trying to keep traditional family vacations going to provide security and stability for the kids.

Finally, unequal assets are defined as trading assets that aren’t equal and have different tax implications. For example, one party may keep equity in the home in exchange for retirement funds. But these are not equal assets after taxes are considered. Adjustments in value need to be made before we can understand what an equitable division would look like.

Andrea Vacca

Dividends Diversify

For the recently divorced, 3 pieces of advice to overcome money challenges. First, dig in and learn everything you can about the family finances. Knowledge is power and leads to a feeling of control.

Second, watch out for housing costs. No longer have the cost-savings of a shared living arrangement with a spouse or roommate? This situation can easily result in doubling one of the most expensive budget items on a per-person basis. So, right-size the housing arrangement. Rent, or move to a smaller more affordable condo, townhouse or single-family home.

Lastly, check the emergency cash fund and top it off with at least three months of living expenses. Keep it in a liquid account. For example, a savings account or money market fund. Once again, there is no spouse to lean on for support in the event of a job loss or significant unexpected expense.

Tom Scott

Digital Nomad Quest

Getting divorced may cause many financial challenges. Firstly, parting ways with your spouse may mean splitting half your assets, and if you were the higher earner, this can cause a lot of loss. In some cases, you’ll even have to sell the house you share in order to split the assets with your ex-partner. Divorce may also mean less income, as you won’t be pooling your resources together. On top of that, there are high lawyer fees that come with divorce – on average, contested divorces may range between $15,000 to $30,000 (according to LegalZoom).

Other factors to consider include alimony and child support. The court may grant alimony to one of the former spouses, based on decisions made between partners or by the court itself. The higher-earning partner would send payments to their former spouse as spousal support. If you have kids and you’re the non-custodial parent, you may also need to send ongoing payments as child support.

As you can see, divorce can set you back substantially. To overcome these challenges, one of the best steps to take is to start tracking your net worth and finances. Figure out what assets, debt, income, and expenses you have, and see how you can reduce your liabilities quickly by saving as much as possible. Also, don’t be afraid to downsize to a smaller home or to a more affordable car. You want to make sure you’re only spending on what you need rather than what you desire. Then, you’ll want to set small goals for yourself, perhaps to save $1,000 for yourself or to stop living from paycheck to paycheck. As you knock out small goals, you’ll start feeling empowered to tackle larger ones.

Lastly, one of the best ways to fight financial troubles is to increase your income. With saving, there is a cap on how much you can save (based on how much income is coming in). If you can diversify your income sources by taking more part time jobs or by looking into creating online businesses, you’ll be able to increase the amount you can save. This in turn will help you combat debt and get you back to a solid financial state.

Sharon Tseung


Usually, the primary financial struggle that newly divorced couples face is how to maintain the same standard of living they had prior to the divorce. It’s certainly not an easy adjustment, especially when you have children to consider. It’s possible that your children will have to transfer from private to public school, as well as forgo any extracurriculars that were involved in. And in most cases, the custodial parent may have to take up a second job to supplement their income.

Bernz JP

I believe that the most obvious financial challenge that divorced people face has to be the division of property. I can tell you from experience that there is almost always a disagreement when it comes to sharing resources accumulated over a long period of marriage as one party feels more entitled to some assets at the expense of the other. How do you solve it? By bartering – where a spouse takes what they value most, and only sells an asset and divides the proceeds equally if they cannot come to an amicable agreement on who keeps it.

Another common financial challenge in divorce is shouldering debts: If sharing resources was hard, sharing debts and other financial obligations is harder. In this case, you may decide to sell some property and settle all debts first before sharing the proceeds. One spouse may also receive more assets in exchange for shouldering more, or the entire debt.

Another common but often assumed financial challenge most divorced people face is how to deal with the retirement funds. It’s especially hard if these are held in a joint and non-withdrawable account or one with a significant premature withdrawal penalty. In such a case, I believe that both parties are better off sticking to the IRS regulations that speak on how retirement contributions can be withdrawn or shared after a divorce without being subjected to punitive fees.

Far from sharing the funds, the individual spouse will face the challenge of planning for their retirement. And the best way to address this is by redepositing their share of the fund in a new individual retirement plan and continuing with the periodic contributions.

Edith Muthoni

Fernandez & Karney

A lot of different things about a divorce can be tough. Many times, spouses underestimate the financial implications of divorce. Here are some of the most common financial challenges divorced spouses face.


When you get divorced, you don’t just have to figure out how to split your marital assets. You also have to consider any debts that might share. This can include things like a home mortgage loan, credit card balances, or even student loan debt, in some situations. If you’re allocated a lot of the marital debt, it can be hard to handle on your own once you’re single again. You might find that a lot of your income has to be dedicated to paying down those debts – even if you weren’t the one responsible for them.

Jumping Back into the Workplace

While it’s much more common for both spouses to work and generate an income, it’s still not unusual for one spouse to stay home and take care of raising a family full time. That often means leaving a career behind. If you’re the spouse who stopped working, you’ll probably have to re-enter the workforce when you get divorced. Alimony – depending your state’s laws – will only help for so long and in a limited capacity. There’s a good chance that you might have to start from the beginning and work your way up the ladder again. That can really hurt your wallet and financial stability.

Steven Fernandez


Here are three important financial challenges to consider when getting a divorce:

    1. Asset Division

One of the most well known financial decisions that has to be made during a divorce is which assets go to who. You will have to provide statements and receipts for the decision of the asset division to be made. As one part of the marriage you will get some assets, but you will have to split others 50/50 with your ex.

To overcome this, make sure you have the proper statements and paperwork that document your ownership of certain assets.

    1. Debt

A lesser-known financial impact that happens during a divorce is the division of debt. While debt most likely follows the issuer, there are some states and circumstances where debt is equally divided among the two. This is definitely something to consider and plan for.

To overcome this, make sure that you have all credit card debt statements, loan details, etc. in order to state what debt you currently own and are paying.

    1. Health Insurance

One of the least-planned financial impacts, but one of the most important, is health insurance. If you are under your spouse’s health insurance, you might be taken off when the divorce is finalized. This is something you should definitely plan for.

To overcome this, contact the insurance company to see what will happen to your coverage after the divorce is finalized, and plan accordingly.

Michael Outar

The best way a divorcing couple can overcome any future financial challenges is to work together to have an amicable divorce agreement. A successful divorce for a high-net-worth couple is the same for a low-net-worth couple. Namely, regardless of the amount of assets that a couple has, it is always better to have an uncontested divorce. An uncontested divorce will be less emotionally draining and substantially cheaper than a contested divorce. A contested divorce is when the parties cannot agree on how to resolve the terms of the divorce with their soon to be ex-spouse. A contested divorce’ may involve a trial or lengthy settlement discussions with the spouse’s attorney. An uncontested divorce, on the other hand, will be cheaper because most issues are agreed upon and do not require paying lots of money to an attorney.

The biggest disagreement that people tend to have about money when going through a divorce is when assets become co-mingled over the course of a marriage. Typically, if a couple does not have a prenuptial agreement, there is disagreement about ownership of assets. A prenuptial agreement is a smart way to clarify what happens in the event a marriage fails, and without one in place, a person can take a serious hit from a divorce.

The laws of a particular state may already protect a person even without a prenuptial agreement. If a person lives in a community property state, then it may not be worth the aggravation and cost of negotiating a prenuptial agreement when the law already distributes assets in the event of a dissolution of the marriage. It is important to investigate in advance how favorable or unfavorable their state jurisdiction is toward adjudicating prenuptial agreements. Many prenuptial agreements are set aside, depending on the jurisdiction, and the ability to enforce a prenuptial should be a top consideration for anyone looking to protect their wealth with a prenuptial agreement.
Working with a spouse to come to a fair divorce agreement is the best way to avoid costly legal bills that eat up most of the value of any jointly held assets.

David Reischer

J.H. White Financial

Depending on the terms of a divorce, financial challenges can range from minor to debilitating for divorcees. Debt is a significant issue for divorcees. Legal costs and the division of assets can disrupt cash flow, prompting the divorcee to begin to accumulate debt, which can very quickly become a snowball effect. The longer a divorce takes, the greater the financial disruption. Budgeting is the key to overcoming cash flow disruptions: the more accurate the budget, the easier it is to make major or even daily spending decisions. Avoiding the temptation to accumulate debt during a divorce proceeding is key; spending habits will need to change based on the magnitude of cash flow changes.

Retirement savings are also a major challenge for divorcees. Often a retirement account is ordered to be split between the two parties, forcing the saver to either push retirement out, or save more aggressively post-divorce. Divorcees can overcome the hit to their retirement savings by re-evaluating their financial goals and reprioritizing their retirement savings by increasing a contribution to an employer plan or saving outside of their employer plan.

Gillian McCarthy

Earn More Live Freely

Divorced people often face financial challenges such as paying their mortgage, especially if they bought a big, expensive house together before their divorce. What they can do is downsize to a smaller house, so that their house payment is more manageable. Or they can consider selling their house and choose to rent instead.

Gladice Gong


Debt doesn’t get divorced in a divorce. Both parties are still responsible even though you have split all of your assets.

If debt is present, it can wreak havoc on personal finances. Even if the divorce decree states that one party is responsible for paying debt, both parties are still held liable if the debt isn’t paid on time. Thus, hurting your credit score and your ability to move forward (especially if you want to buy another house) because of the debt-to-income ratio.

To overcome this, pay off any debt with assets before the divorce is finalized. That is the best-case scenario. If that is impossible, then you have to figure out your next steps.

If you have faith that your ex will pay the debt on time, then you can continue to move forward in faith until the debt is fully paid off. If not, then get a court judgement to garnish wages until the debt is resolved.

Unfortunately, when wage garnishments happen, many people jump to another job (or work under the table) to avoid their wages being garnished. Then, you have to decide if paying the debt yourself is worth it, and then go back to court to get another judgement to reimburse the amount of debt you already paid off.

Kristy Marshall

Mom Money Map

Assessing and splitting both the financial assets and debts (including everything from real estate to credit card debt) are some of the biggest financial challenges that divorced people face. Often, when you file for divorce, your first thought is how the assets should be divided. You don’t think about how both your debt and your spouse’s debt need be taken into consideration. The ideal way to overcome this challenge is to get rid of your debt before you file for divorce. If this isn’t possible, educate yourself on the financial realities of divorce debt. Have a detailed understanding of your finances so you know what debts you’re dealing with.

Jacqueline Gilchrist

About the author

Steve Horton