When you divorce, you need to divide the things that belong to you. Most of these you want to keep or at least get your fair share of. They include the savings account, the business and the kids. Yet, there is one thing that you might prefer to let your spouse keep for themselves — your debts.
People often overlook debt when divorcing. Yet, like all the good things you own, you need to split your debts with your spouse when your marriage ends.
Not all debts are marital property
When preparing to divorce, you need to list everything you own and everything you owe. You then need to subdivide each into either marital property or separate property. The division is not always obvious, so seek legal help if you are unsure.
Typically things owned or owed before marriage remain separate. Those acquired during the marriage are marital. Pre or postnuptial agreements may also state how to treat specific assets or debts.
Does this mean you can take out a loan to get that sports car you always wanted, knowing your soon-to-be ex-spouse will have to pay half? No. Divorcing couples have the right to challenge excess debt their spouse accrued around the time of their divorce.
Try to separate your debts when divorcing
Retaining debts together after divorce could lead to problems. You might reach an agreement with your spouse to both pay half of each month until you pay it off. Yet, if they cannot make their monthly payment, it will affect your credit score, not just theirs.
It is best to separate your debts by refinancing or other means so that each person is only responsible for their share. Often the best way to deal with debt is to sell assets to pay off your joint debts. After all, the total of your property is what you own minus what you owe. When you say you own a house, it is often the bank that owns the lion’s share.