Wiping Away Credit Debt After a Financially Messy Divorce

Woman trying to figure out her credit debt after divorce

The total amount of revolving debt in Canada is more than $600 billion, and that doesn’t include secured debt, like mortgages and car loans. When you carry a chunk of this debt on top of the expenses and difficulty of a divorce, you’re paying interest every month just for the privilege of continuing to borrow the money. Make your financial footing more solid by evaluating your debt and taking concrete steps to get rid of it.

Manage Your Credit Report

When you have a lot of debt after a divorce, your credit report is a bit of a mess. It may be littered with late payments, collection accounts and credit cards dangerously close to their limits. Get a copy of your credit report for free each year from Experian, Equifax and TransUnion through AnnualCreditReport.com. Not only will this give you a full picture of what you owe, but you can also see if your accounts are being reported correctly. Disputing errors through the credit bureaus that provided the erroneous reports can help boost your credit score.

One of the main steps to restore your life and start over is to get out of debt and improve your credit score. This not only makes borrowing in the future less expensive but can also help you get lower auto insurance rates and have an easier time renting a home. For newly separated or divorced people suffering from bad debt, renting an apartment or buying a car doesn’t have to be as difficult as you might think. For example, former buy-here-pay-here dealerships offer auto loans with various repayment plans. Making payments on time will slowly but surely improve your credit score.

Create a Detailed Budget

Once you know what your debts are, it’s time to make a plan for how to make consistent payments on them every month. Take full stock of the money coming in each month, then create a budget to plan how you will spend it. Start with necessary payments, like your housing, utilities and all of your debt payments. Then allocate any remaining money to variable expenses (gas, groceries) and luxuries (new clothes, entertainment and vacations). When you have a plan, you won’t need to keep going into more debt each month to make ends meet.

Change Your Lifestyle Perception

Your lifestyle may drastically change after you’re divorced, so changing your perception and expectations may be a necessary part of getting out of debt. If you embrace a frugal lifestyle and enjoy the good you do have in your life, it’s a lot easier to forgo those things you see others getting that you can’t afford. In the book “Living Well with Bad Credit,” the authors encourage you to realize that the good life is subjective, and you can be perfectly happy even when your credit is horrible.

Use Extra Money to Pay off Debt

When you end up with unexpected money, don’t spend it on things you don’t actually need. Instead, pay off a debt to lower your balances and reduce your monthly interest charges. For example, CBS reports that the average tax refund is $3,000. Putting this toward the typical credit card bill will save you over $500 on interest in the next year. If you get a raise at work, put that extra income toward debt repayment rather than expanding your lifestyle. You can also scrape together extra money by clipping coupons to save on grocery bills or foregoing usual luxuries like your morning latte. Putting all of this money toward debt repayment will help you get out of debt sooner.


Most people who go through divorce have a difficult time adjusting to the new financial reality. It’s normal. The good news is that most can recover from it. The key is to be focused on getting rid of your debt and living within your means. Winning the lottery is also helpful.

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Brian Galbraith

Brian Galbraith is the owner and founder of Galbraith Family Law Professional Corporation. Brian is known in the legal community for his commitment to efficiently practicing family law using technology and streamlining the divorce processes.

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