On behalf of Stange Law Firm, PC posted in divorce on Monday, June 13, 2016.
There is no quick and easy way to answer the question posed in the headline of this post. The answer, which may be quite frustrating, is, “it depends.” Just as there are different types of assets that may or may not be eligible for distribution in divorce, there are also different types of debt.
Debt you have taken on before a marriage will generally be considered separate; debt accumulated during the marriage will generally be considered marital, and therefore can be split between both spouses. Figuring out what type of debt you are carrying will help you determine which debts you will be responsible for repaying after divorce or as a part of your settlement.
As this AOL article notes, it isn’t always easy to separate one expense from another to fit your debts neatly into the two categories of distribution eligibility. However, based on numerous factors, the courts will do what they can to split up the debt in a way deemed fair and balance debt obligations with asset awards.
You will also want to keep in mind that unless you refinance shared expenses like your home and car, companies can come after both of you if payments are missed or late, even if the property was awarded to one of you in the divorce.
So, even if your ex keeps the car and promises to keep up with the payments, the bank can still come after you if he or she is delinquent unless you can get yourself removed from the agreement or title. The same goes for credit cards in both of your names.
Millions of Americans are saddled with debt payments, making it very likely that you will have to deal with debt allocation in your divorce, whether it stems from a mortgage, car loan or credit cards.
In order to understand how and if debt will affect your divorce, it will be crucial that you discuss the situation with your divorce attorney and/or your creditors. Doing so as soon as possible can help you minimize the financial fallout of marital debt.