A debt consolidation loan is incurred by individuals willing to pay off all their existing mortgages with varying interest rates and has one low-interest rate credit. Usually, such loan seekers are between 28-45 years old. 

Table of Content 

Most loan seekers marry, and the debt amount is paid, summing the income of both spouses. However, in the post-divorce phase, it becomes difficult for both individuals to manage and repay their debts individually as the payment is split and the share of the debt is comparatively high. Hence when there is divorce among these debtors, a proper evaluation of the assignable debt amount is to be made by the court as per the particular country's rules and regulations. 

However, individuals can control their debts in the following ways

Analyzing income and debts

Post-divorce, explaining one's income and keeping proper track of all expenses becomes essential. As the payment is now less than early and the budget is planned as per the new earnings, debts will be paid off accordingly. Proper income analysis gives a bright idea of expenditures and helps balance income and liabilities. Income analysis also informs you of the prior basis in case more funds are needed to repay your debts.

Hiring an attorney or a debt settlement company

One of the wisest decisions can be hiring an attorney or a debt settlement company on the suitability of the financial situation of a divorced debtor. Both have their advantages and limitations depending upon how the debtor uses them. An attorney can guide you step by step in making all the financial and post-divorce legal decisions. He can always be with you to show you what is legally right or wrong. Also, he can assist you in filing allegations against some individual or a company in case of any illegal practice.

On the other hand, the debtor can approach debt settlement companies like national debt relief.com to seek guidance for debt settlement. These companies help individuals make a final solution for their loan at a reasonably low price or a meager interest rate compared to their actual due amount. These debt settlement companies specialized in negotiating the loan amount with creditors. In exchange for these services, they charge a certain percentage of commission on the total amount saved by the debtor or may charge service charges.

Paying a lower rate of interest and avoiding Bankruptcy:

As time passes, debtors may struggle to pay all the essential expenditures and liabilities. In this case, he can take the services of settlement companies to lower his interest rates, as mentioned above. The debtor can submit his application to the financial institutions requesting to reduce his interest rate as he is genuinely unable to cope. The financial institutions may or may not agree to lower their interest rates, but they can devise other solutions, like giving grace time to pay off the debt. This will help the debtor to avoid the option of filing for Bankruptcy.

Having no future debts:

The debtor shouldn't have any secured or unsecured debts after divorce as he is already liable to pay any dues. Future debts like credit cards or personal loans will add to the debts and increase the chances of Bankruptcy, so avoiding future obligations is a must.

Safeguarding accounts:

It is essential to safeguard bank accounts and credit cards post-divorce. Ex-spouses can misuse authority, which may lead to future debt. Hence all the possible areas where the ex-spouse was assigned as an authorized user should be blocked, and power should only be given to the primary account holder. This authorization can also be done through a simple phone call.

Filing Bankruptcy

Coping debt repayment after divorce might be difficult for debtors who have to make ends meet and struggle to satisfy their daily needs. In such a situation, filing for Bankruptcy is the best and the last option for the debtor. Bankruptcy allows the debtor to do a one-time loan settlement of pending dues in exchange for his assets or secured equities. As a last resort, Bankruptcy is the last chance to clear all the rights.

Divorce from a creditor's perspective

The debt consolidation loan is incurred in either spouse's name. But after the divorce, the debt amount must be paid by both parties regardless of anything. Depending upon its laws and regulation, the repayment process may also differ in different countries. Often, the final settlement of the loan taken during the marriage is challenging for the creditors as appropriately and accurately segregating assets and liabilities is complicated and time-consuming. Financial institutions need to be more bothered about who pays the debt. They only want their debts to be repaid by the debtors. The financial institutions may agree to join hands with settlement companies if they are tentative about the payoff from any debtor. Also, they might even grant lower interest rates or grace time to pay off the due amount just to ease the debt settlement process for both the debtors and themselves.

Divorce can be complicated when it comes to settling a debt consolidation loan. However, legal orders play a vital role in recovering debts from both spouses post-divorce. After adequately analyzing the couple's divorce case and debt status, the court gives each spouse their share of liabilities. Apart from the court, individuals are also advised to cooperate with the law and financial institutions to repay debts.