Debt is a lot more common than you imagine. In fact, a whopping 13% of Americans expect to be in debt for the rest of their lives. Does it mean that debt is unavoidable?
Well, not so fast. It is true that the collective American debt reaches about $14 trillion, which is a non-negligible sum. To put it into perspective, a trillion is a 1 followed by 12 zeros. Still feels too big to imagine? It’s as if you bought 37 million average family houses.
Yet, more often than not, debt is only a passing shower in your financial life if you write a budget and prioritize repayments. Indeed, the student loan, for instance, is designed to create an initial debt, which you can repay with strategic finance management. Additionally, as 19% of Americans fail to create emergency savings, unexpected costs such as home repairs can drain the budget.
Finally, medical costs have increased faster than the income. Therefore, something like getting injured at work could be a debilitating money burden if you fail to seek legal protection.
But, in many cases, the debt is not yours to manage, and you can walk away from it or reduce it considerably.
Community property debts during separation
Many couples don’t realize that some debts incurred during a marriage can be divided between both parties after a divorce. In other words, community debts will be split equally with the help of an aggressive lawyer who will fight for your rights, as explained here https://www.hutsonlaw.org/. Community property exists in the following states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In some states, you can opt whether you recognize community property.
The bottom line: You may not have to pay your debt by yourself.
You don’t live in a community property state
As mentioned, there are 9 community property states in the U.S., and another 3 states (Alaska, South Dakota, and Tennessee) where community property applies to divorce debt.
So, if you live in any other state and your spouse incurs debt during the marriage, which they try to pin on you through the separation process, you have every right to reject it and fight it off. It is useful to have a legal advisor on your side who can ensure that debts incurred separately and not related to traditional marriage assets remain separate.
Beware: Joint credit card debt and cosigned credit card accounts will still affect you. You can remove your name from a cosigned credit card account if your spouse qualifies to hold the account at the time or before the divorce, hence removing your responsibility to manage their debt.
Your medical insurance cover is insufficient
It is worth comparing covers and considering switching to a new insurer to ensure that you can receive the support you need. Some insurers may not provide the services you require for your health, which is likely to drive your medical costs high. For example, if you struggle with diabetes, it may be a good idea to research health insurance with the best coverage and cheapest premium for your health condition, such as this comparison here https://www.benzinga.com/money/best-health-insurance-diabetics/. Switching could significantly reduce your medical debt!
In conclusion, understanding why the debt happens and how to remove or reduce it fairly can be a life savior when it comes to finance management. Remember: You are not always responsible for the debt, so you may not need to pay all of it every single time!
