How to Get Out of Debt After Divorce

Getting out of debt is hard for any individual, but sometimes after a divorce, it is even harder. Bills pile up, and sometimes expenses are unevenly split because of a rough situation. Emotions run high, and sometimes, debt piles up before the consumer even knows it. However, through proper budgeting and planning, you too can get out of debt after divorce.

Instructions

1

Check your credit. Go to a website, such as AnnualCreditReport.com, and get a free tri-merge credit report. You will have to provide the company with your date of birth, full legal name, Social Security number and a credit card number. Select all three bureaus' reports: Experian, TransUnion and Equifax. To order your credit score, however, will cost you about $30 to $40, depending on the site you select.

2

Go through your report and see if any of your ex-spouse's information is listed on the report. Immediately report any errors or misplaced debt to the credit bureau. This can be done online by selecting the line item and highlighting the reason for the error. The bureau has 30 days to respond to you, by law. Remember if the debt is in both names, you are liable even if your ex-spouse is supposed to pay it. Make sure to receive a copy of each monthly statement on the debt to ensure that it is paid on time.

3

Create a budget. List where every dollar of your income goes and categorize it by spending. Look through your budget and see if any extra items can be deleted--such as cell phone extras and cable TV packages.

4

Make a list of all debts. Rank them in order of smallest monthly payment to the largest. Contact each lender and ask if they will lower your interest rate based upon a good credit score (700 and above) and on-time payments for a year (if applicable).

5

Take on extra work or have a garage sale to earn extra funds to apply towards savings and debt.

6

Build up a 3-to-6 month emergency fund prior to paying off debt. This will decrease your dependence on future debt.

7

Pay any excess funds toward the smallest monthly payment listed in Step 4, according to Dave Ramsey's Snowball Debt Method. Pay on this debt until paid in full. Apply all excess funds plus the amount of the smallest monthly payment to the next smallest monthly payment. Continue to pay on this debt until paid in full. Continue the pattern until all debts are paid in full. Dave Ramsey suggests this pattern to create momentum and quick success.