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Scott B. Meyer Attorney at Law

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The allocation of debts in divorce

On Behalf of | Mar 26, 2020 | Firm News

In a divorce, the law considers your debt in the same way it considers your assets. There is no chance that if you and your spouse have debt that you will walk away without any liability for those debts. The court will split it fairly, just as it does the assets. That also means the court classifies debt the same as assets.

Some debts will be marital debt that you incurred together while other debts will be separate because you accumulated them prior to your marriage. According to Forbes, the court will typically keep debts with the assets associated with it. For example, whoever gets the car will probably also get the responsibility of paying the car loan.

Watch out for credit cards

Debt in a divorce can become dangerous. If you both have a credit card together, for example, then your spouse could start charging to that card and creating debt that you may have to pay off in the future. It is important that you end all joint debt obligations when you file for the divorce if possible.

Consider taking on some debt

Debt may offset some assets you receive. For example, if you owe money on your home and you receive the home in the divorce, the court will consider the mortgage when looking at the overall value of the home. This could reduce your property value. You may end up getting additional assets to offset the amount of debt you now carry.

Beware of the ultimate responsibility

The court may order that one of you has the responsibility to pay a certain debt by yourself. However, if a debt is in both your names, you both still maintain the responsibility for the debt. Should you not pay it, the lender will seek payment from the other spouse. The court order does not change the legal obligation of the credit contract.