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Advice on debt and divorce

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Mark Cappel
UpdatedMay 16, 2024

I have $31000 in credit card debt and just got divorced, should I withdraw money from my insurance to pay them off?

I have $31000 in credit card debt and just got divorced. I have written the creditors that I'll pay them 100 dollars per month each. My intentions is to pay them but I'm layed off so I'm having problems. I have a $20000 insurance that i can withdraw in april but I only have 6 thousand in savings. I was going to withdraw the money and pay 10k to the creditors and then try to pay down the creditors the best I can. Is this a good idea or should I not bother with the 20k. Im 54 years old.

First, you should know that you are by no means alone in this predicament. Divorce drives more Americans to the edge of financial disaster than almost any other life event. The most important consideration in answering your question is whether or not your ex-wife has any personal liability for these debts. She is probably personally liable if you and she were joint cardholders, or if you live in a community property state (like California, for example).

If she is personally liable, your divorce decree should specifically say that you are responsible for paying these debts, and that you will "hold the wife harmless" against the specified creditors (or words to such effect).

Defaulting on or even failing to keep the accounts current could result in collection action against your ex-wife, and she could sue you for violating the divorce decree. However, if you are the only cardholder on these accounts, and you do not live in a community property state, she is probably not liable for the debt, and your failure to keep the accounts current should not affect her. If your ex-wife is personally liable for the debt, or if your divorce decree states that you must pay these debts, your idea of cashing in your insurance to pay the debt may be a wise decision.

If the divorce decree orders you to pay the debt, you could wind up back in court if you fail to pay and then incur liability for both attorney's fees (yours and hers) and who knows what else. With the $20,000 from your insurance, plus the $6,000 from your savings, you would be very close to paying the debt off.

You may also want to consider joining a debt settlement program, which could help you resolve your accounts in as little as two to three years, without filing bankruptcy.

Debt settlement, also called debt negotiation, is a form of online debt consolidation that cuts your total debt, sometimes over 50%, with lower monthly payments. Debt settlement programs typically run around three years. It is important to keep in mind, however, that during the life of your debt settlement program, you are NOT paying your creditors. This means that a debt settlement solution of online debt consolidation will negatively impact your credit rating. Your credit rating will not be good, at a minimum, for the term of your debt settlement program. However, debt settlement is usually the fastest and cheapest way to debt freedom, with a low monthly payment, while avoiding Chapter 7 Bankruptcy. The trade-off here is a negative credit rating versus saving money. makes it easy for you to apply for qualified providers of debt help, by following this link:

Debt Help

I hope the information I have provided helps you Find. Learn. Save.



Dealing with debt

If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2023 was $17.503 trillion. Student loan debt was $1.601 trillion and credit card debt was $1.129 trillion.

According to data gathered by from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.

Each state has its rate of delinquency and share of debts in collections. For example, in Wisconsin credit card delinquency rate was 2%, and the median credit card debt was $371.

Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.



BBill, Jan, 2009
Yes, the court will look at both of your finances in detail when they finalize the divorce.
JJulieta, Jan, 2009
Even if we have been separated for more than 2 yrs and it all of my debt from credit cards?
BBill, Jan, 2009
No, the divorce court will decide on how the assets and liabilities will be split.
JJulieta, Jan, 2009
I'm 26 and want to get divorced. I'm in debt with credit card bills like 20,000. I don't know what to do. Is this going to affect me getting a divorce?