Divorcing couples are typically concerned with dividing assets in the fairest manner. Reaching a successful compromise can be challenging depending on various factors centered on the financial history of the marriage and the marital assets acquired over the duration. In recent years, however, couples have started to recognize the importance of carefully navigating a compromise focused strictly on determining who takes over which marital debts.
Dividing debts in a divorce can be a complex, emotional process. As with most factors, the division of assets and debts can be a heated debate. There are many types of debts to be carefully examined through the process, such as:
- Credit card: Whether you had joint credit card accounts or kept everything separate, many states consider marital credit card debt a shared responsibility no matter the name on the account. It’s possible that both parties will be responsible for paying back the debt regardless of who was making payments during the marriage.
- Mortgage: In this day and age, it is uncommon for only one spouse’s name to be on the home mortgage. As such, it is likely that both parties will ultimately be responsible for the debt after divorce. This can be approached proactively in one of two ways: sell the house and split the profit or one spouse buys the other out of ownership.
- Auto: As with any debt, if both names are attached to the asset and payments are not made, then both individuals can suffer a hit to their credit. With a marital vehicle, it is wise to carefully negotiate who will assume the property and debt when discussing the divorce. Divorcing couples might be wise to trade in or sell an expensive car – using the profit to pay off any remaining debt – and purchase a vehicle more amenable to their new lifestyle.
- Medical: While many states handle medical debt differently, it is important to proceed cautiously. The division of marital debts might require the divorce proceeding to examine medical debt, when it was acquired and the potential impact the debt might have on any children.
By the time a divorce becomes a reality, it is likely that you and your spouse have become embroiled in numerous arguments. Even if you are facing an amicable divorce, many factors that must be addressed during mediation – child support, child custody, parenting plans, property division, debt division – can spark heated debates. It is wise to seek the counsel of an experienced legal professional for guidance.