Couples generally focus their attention on the division of property during a divorce. From deciding who gets the rare book collection to who maintains access to various digital assets, property division can quickly become a series of heated disputes. It is crucial that divorcing couples also thoroughly examine their marital debts to gain a clear picture of what their future finances will be.
The entire financial picture will generally include assets, debts and support. It is important to take the time necessary to identify debts and determine who will accept the responsibility for repayment.
- Credit cards: A married couple will likely share numerous financial accounts. Most likely, the court will determine that both parties are responsible for paying the debts on shared credit cards no matter who made the purchase.
- Home mortgage: Couples will generally either sell the house and split the profits or one party will buy out the other party’s stake in the property.
- Auto loans: These can be complicated as generally both parties will have their name on the loan. Additionally, both parties will have used the vehicle for trips, errands or getting to work.
- Medical debt: Most often, both parties will be forced to divide the medical debt accumulated during the marriage no matter who directly benefited from the procedure.
It is important to remember that creditors do not typically recognize a divorce order. What this means is that if your ex was given responsibility to pay a debt that was initially shared between the two of you – and your name is still on it, such as a shared credit card or a joint auto loan – you are still responsible for paying in the eyes of the creditor.
Ultimately, the best advice is to work to pay off your debt prior to the divorce or have a clear strategy in place. For example, if your spouse is planning on keeping what was originally a joint credit card, he or she can open a solo card and transfer that balance, so your name no longer appears on the account. Do not hesitate to seek legal guidance for these complex situations.