If you are wondering what to do with any unsecured debt from your divorce, the answer is simple. Pay it off and pay it off as quickly as possible.
Now, it is true that student loan debt is unsecured and those loans can be part of a healthy financial plan especially if they have interest rates that are lower than 4 percent. If the interest rates are higher than 4 percent then you consider paying down your debt. Look at the interest rates on all your different debts to decide which one to pay off first.
Paying down your debts means not making investments, not putting savings towards your Emergency Fund and even cutting back on your 401(k) investments to the minimum you need to secure your company match but not more than that.
The best rule with credit cards is to pay them off in full each month because if you carry a balance, the balance is subject to interest and today those rates range from 12 – 22.6%.
If you have an Emergency Fund then it’s better to break into it to pay off the credit card debt rather than to keep accruing interest.