Much of the focus during marriage dissolution is on division of marital assets. While property division is certainly crucial during divorce and can set the stage for your financial wellbeing for years to come, you shouldn’t overlook the importance of marital debts. After all, if you don’t properly deal with these financial burdens at the time of dissolution, then you could find yourself strapped to debt that you thought that you had escaped long ago.
How marital debt may affect you
In divorce, marital debts are treated the same way as marital property. That is to say that marital debts are divided in an equitable, albeit not necessarily equal, fashion. But because marital debts are often overlooked, you may end up with an overwhelming amount of the marital debt if you’re not careful. Here are some things to take into account as you navigate your divorce:
- Credit card debt: In most divorces, each individual is accountable for his or her own individually held credit card debt. Things can get complicated, though, when accounts are jointly held. Here, it’s best to try to transfer the debt balance to a card held in one person’s name, however you decide to negotiate that debt.
- Auto loans: Auto loans can be treated in a similar fashion. If you and your spouse are both on the loan, then it’s probably best to refinance the loan in the name of the individual who will retain the vehicle post-divorce.
- Mortgages: Unless you and your spouse choose to continue to co-own the property in question, a mortgage will probably need to be refinanced prior to divorce to ensure that the debt is fairly dealt with through the dissolution process.
What about bankruptcy?
You might think that your former spouse’s bankruptcy filing will protect you from his or her debts, but if you’re a joint holder of that debt, then your spouse’s successful bankruptcy petition makes you the sole owner of that debt. This is one of the many reasons why you need to properly handle marital debt during the divorce process instead of kicking the can down the road.
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We know that dealing with divorce legal issues can be complex and stressful. But we know how to carry the burden for our clients, fighting to ensure that they achieve the favorable outcome they want and deserve. If you’d like to learn more about how we go about doing that, then please continue to browse our website.