How should we deal with our marital debt? We owe more than we own.

“How should we deal with our marital debt? We owe more than we own, and I don’t want to end up holding the bag because I earn more than my spouse.”

Money problems often contribute to marriage problems, and vice-versa, so it’s not unusual for people contemplating divorce to have debt problems at the same time.

If you can, pay off the debts with joint funds. For example, if you’re selling the house, arrange to have the bank or escrow company pay off the debt before it distributes the proceeds to you. If you have savings, pay it off from those funds.

If you won’t be able to pay off debts with joint funds, one or both of you are going to have to assume the debt and repay it in the future. If you and your spouse have good credit, you each can apply for credit cards in your own names. Then each of you can transfer your share of the debt to your own credit cards. After you do that, be sure to cancel all joint credit cards.

If you’re considering bankruptcy, you’ll have to decide whether to divorce or go bankrupt first. In general, if you both plan to file for bankruptcy, filing separately after divorce will cost more in filing fees and attorney fees. It will also be fairer to both spouses if the bankruptcy comes before the assets and the debts are split in divorce, so you know what you have left to divide once the debts are discharged. Consult with a bankruptcy attorney before going any further.

As a nationally recognized expert on money, Ginita Wall is is the author of eight personal-finance books, including It’s More Than Money, It’s Your Life! The New Money Club for Women. Ginita lectures frequently and has appeared in numerous financial publications, websites, and television shows. A San Diego CPA (Certified Public Accountant), CDS, and CFPª practitioner specializing in divorce, she’s the co-founder of the Women’s Institute for Financial Education (www.WIFE.org). She can be reached at (858) 792-0524. View her website.