When people think of dividing property during a divorce, they often think of their assets like the matrimonial home, bank accounts and personal property. However, you will also need to address debt.
Dividing debt is similar to dividing assets. However, the process can be more challenging than people expect, particularly if parties hope or expect to divide debt unequally. However, with some basic information on the process, it can be easier to understand how you can address debts if you are divorcing.
One of the first steps in addressing debt it to confirm that it is family debt. To do this, you must establish when you or your spouse took the debt on. If it was during the marriage, it typically is a family debt, even if only one person’s name is attached to the debt.
In most cases, parties will divide family debt equally. The logistics of how this happens will vary between each case, but it could mean dividing debt accounts between divorcing spouses or dividing the total amount between the two people. Again, though, the division will be equal in most cases.
That said, there are situations where equal division is unfair to one person. In these cases, courts will consider whether and how to divide the debt unequally based on factors like written agreements to divide debt unequally, each person’s ability to pay down the debt and the reason for the debt.
Depending on how much debt you may have, you may resolve it in a number of ways. If there is a small amount, you might agree to pay it all off together right away.
If you have more substantial debt, you could divide the debt and continue paying it down on your own after divorce. However, it is crucial to understand that dividing debt in a divorce does not necessarily mean you will no longer be accountable for debt your ex is supposed to pay. If your name is on an account alone or with your ex, creditors can seek payment from you, regardless of your divorce agreement.
At any of these points, it is possible for conflict to arise. Understanding the basic processes and options regarding dividing debt in a divorce can make it easier to resolve these issues amicably. However, for specific guidance and information, talking to a lawyer will be wise.