Divorce is a major financial transaction. If you don’t’ prepare yourself to properly handle the process, you could lose out on the financial resources that you need to be stable post-divorce. Don’t let yourself be taken advantage of.
In order to avoid an unwanted outcome, you’re going to have to understand how the law applies to your specific set of circumstances. While that includes recognizing that your marital property will be divided in a fair manner, it also means understanding that your debt will be divided in an equitable manner, too.
How to handle debt in your divorce
In a lot of cases, people who are going through marriage dissolution put so much attention on their marital assets that they forget to give the right amount of attention to the debt that may affect them post-divorce. Just like with marital property, marital debts can become your debt, and you might thus be left with more than your fair share if you’re not careful. Therefore, if you want to ensure that you’re properly handling debt in your divorce, you need to consider doing each of the following:
- Identifying marital debts: Before you head into negotiations, you’ll want to make sure that you have a full understanding of your marital debts. These are typically debts that you took out jointly with your spouse or that were used to benefit both of you. These debts are most likely to be split evenly by the court.
- Determining individual debt: As you’re identifying marital debt, you shouldn’t let your spouse convince you that some of their individually held debt is marital in nature. Otherwise, you’ll be on the hook for paying back debt that never benefited you in the first place. So, consider whether the debt in question was taken out solely by your spouse and to their benefit. You’ll want to conduct the same analysis on debts that you took out to see if you can include them in the marital estate.
- What makes sense: There are going to be certain debts that just make sense for you to keep and others that make sense for you to pass on to your spouse. For example, if you and your spouse jointly took out an auto loan but you’re going to keep the vehicle, it makes logistical sense for you to retain that debt. Just make sure the debt is divided in a way that is fair.
Other considerations when dividing debt in divorce
There are other things that you need to take into consideration as you figure out how to divide debt in your divorce. For example, even if you and your spouse agree to divvy up debt, your creditors won’t be informed.
Therefore, you’ll want to think about refinancing debt in order to avoid a situation where your spouse fails to pay a bill, which then leaves you facing aggressive creditors and the possibility of taking a hit to your credit score. Also, you’ll want to make sure that you’re making a budget that adequately takes into account any debts that you’ll be taking on post-divorce.
Competently protect your financial interests during your divorce
Your short-term and long-term financial stability is on the line in your divorce. Therefore, you can’t leave your divorce negotiations or litigation to chance. Instead, you need to diligently work to craft a legal strategy that protects your interests.
In order to effectively do so, you might want to work closely with a legal professional who can answer your divorce-related questions and advise you about how best to proceed in your case. Hopefully, you can zealously advocate for and obtain an outcome that is right for you.