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How to Divide Debt in a Divorce
Edited by Chris, Maluniu, Madison Finn, HKristineWhite and 1 other
Dividing marital debts during a divorce can be very difficult since spouses likely will disagree about who should assume the debts of the marriage. Taking the time to understand how the law works with regard to how debt is divided during a divorce will help make the process easier.
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EditSteps
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1Consult your attorney. An experienced divorce attorney will have a good understanding of the laws pertaining to the division of debt as well as have suggestions about how to best proceed through the division process. Divorces can be complex in themselves, but when there is property or debt to be divided, they can become even more complex. Hire an experienced attorney to help you through the process.Ad -
2Make a list of all debts owed. In order to come to the best possible division of debts, it is important to take an honest look at your finances, both personal and marital. Take the time to write down each debt owed, to whom it is owed, the amount of the debt, and any applicable account numbers. Identify the debts that you personally incurred before the marriage and those that were incurred by both spouses during the marriage. Ordering a credit report can help with this step. -
3Identify each spouse’s income. It makes good sense to assign more debt to a spouse that generates more income because that spouse has more money to pay off the debt. Keep in mind each spouses ability to pay down the debt when making the division. -
4Determine who will benefit from the source of the debts. If, for example, the husband will keep the marital home for himself after the divorce, the husband is receiving the benefit of the home mortgage and it would make sense for him to assume that debt. If the husband will have custody of the children in the marital home, it might make better sense to divide the debt differently so that the wife contributes to the mortgage. -
5Divide debt according to type. Every couple has a different financial situation that must be dealt with during a divorce. Below are some common types of debt incurred during a marriage. Come to an agreement about these types of debt based on your specific financial situation.- Dividing car loan debt: If the couple has two cars, often each spouse will retain a car and the loan associated with the car that he or she used most frequently during the marriage.
- Dividing mortgage debt: There are two common ways to deal with mortgage debt. The first way is to sell the marital residence and satisfy the mortgage with the proceeds of the sale. Another way to satisfy the debt is to assign ownership of the marital home to one spouse and have that spouse become individually responsible for the mortgage. This second way is most common in cases where the couple has children who would be disrupted by having to move.
- Dividing credit card debt: Dividing credit card debt is more difficult than dividing other types of debt in that the debt is often not coupled with the benefit of an asset (such as a car or a home). Credit card debt should be divided such that the spouse who receives the debt has the ability to pay the bill. For example, if one spouse has a high paying job and the other spouse is unemployed, the credit card debt should be assigned to the spouse who has the high paying job,
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EditTips
- Continue to make payments for taxes, the mortgage, or car payments, even if you believe your spouse should take on those debts. Failing to make a payment can lead to the loss of an asset. You can always ask the court to order your spouse to reimburse you later.
- Engage in a productive conversation with your former spouse. It may seem impossible to have a rational conversation with your former spouse while going through divorce proceedings, but coming up with your own division of debts is often more equitable than leaving the decision up to the judge since only you and your spouse truly understand your financial situation. Meet with your lawyers present if necessary to facilitate this step.
- If you can satisfy your debts by selling some of your assets, it may be in your best interest to do so. Consult an attorney or financial advisor for information about paying off debts.
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