Married couples usually share their income and their assets. They live together and provide day-to-day support for one another. They may also take on debt jointly. Many married couples open joint credit card accounts and share responsibility for their mortgages.
If they decide to divorce, they have to find ways to split up not just their property but also their debts. It can be very difficult to reach a reasonable solution for shared financial obligations during a divorce.
What typically happens with marital debts when spouses decide to separate?
Spouses share financial responsibility
Under equitable distribution rules, all marital debts and assets are subject to division when couples divorce. They don’t necessarily have to divide every account and asset evenly. Instead, they create an inventory of all financial responsibilities and resources.
They then try to find a fair way to divvy up those assets and obligations. Spouses may need to consider what might happen in scenarios where one spouse files for bankruptcy or defaults on their financial obligations after divorce.
Sometimes, one spouse takes responsibility for certain accounts while the other agrees to pay other debts. Other times, the spouse with more income and more separate property might agree to retain most of the marital debts. Couples can also use marital assets to pay off their shared financial obligations.
There are many options available to those negotiating a settlement and judges applying equitable distribution rules to the marital estate.
Not all debts are divisible
It is important to note that some debts may be the separate responsibility of one spouse. What matters is not the name on the account but rather the timing of when they took on the debt and the intention behind accruing it.
Debts that existed before marriage or that people accrued after legally separating are usually not part of the marital estate. Additionally, debts taken on as a form of marital dissipation are often excluded from property division proceedings.
Some people open and then max out new credit cards as a way of diminishing the marital estate before they file for divorce. Others might use credit cards or personal loans to fund an extramarital affair. In some cases, they may take on debt solely in their own name while hiding it from their spouse.
If a debt was not to support the family but rather for personal enjoyment, then it is likely not part of the marital estate. A thorough review of finances can help people quantify the debts they have to divide and propose reasonable arrangements for handling marital debts and assets.
Negotiating appropriate property division terms by asking for a reasonable division of debts can be as important as fighting for certain assets during divorce.
Married couples usually share their income and their assets. They live together and provide day-to-day support for one another. They may also take on debt jointly. Many married couples open joint credit card accounts and share responsibility for their mortgages.
If they decide to divorce, they have to find ways to split up not just their property but also their debts. It can be very difficult to reach a reasonable solution for shared financial obligations during a divorce.
What typically happens with marital debts when spouses decide to separate?
Spouses share financial responsibility
Under equitable distribution rules, all marital debts and assets are subject to division when couples divorce. They don’t necessarily have to divide every account and asset evenly. Instead, they create an inventory of all financial responsibilities and resources.
They then try to find a fair way to divvy up those assets and obligations. Spouses may need to consider what might happen in scenarios where one spouse files for bankruptcy or defaults on their financial obligations after divorce.
Sometimes, one spouse takes responsibility for certain accounts while the other agrees to pay other debts. Other times, the spouse with more income and more separate property might agree to retain most of the marital debts. Couples can also use marital assets to pay off their shared financial obligations.
There are many options available to those negotiating a settlement and judges applying equitable distribution rules to the marital estate.
Not all debts are divisible
It is important to note that some debts may be the separate responsibility of one spouse. What matters is not the name on the account but rather the timing of when they took on the debt and the intention behind accruing it.
Debts that existed before marriage or that people accrued after legally separating are usually not part of the marital estate. Additionally, debts taken on as a form of marital dissipation are often excluded from property division proceedings.
Some people open and then max out new credit cards as a way of diminishing the marital estate before they file for divorce. Others might use credit cards or personal loans to fund an extramarital affair. In some cases, they may take on debt solely in their own name while hiding it from their spouse.
If a debt was not to support the family but rather for personal enjoyment, then it is likely not part of the marital estate. A thorough review of finances can help people quantify the debts they have to divide and propose reasonable arrangements for handling marital debts and assets.
Negotiating appropriate property division terms by asking for a reasonable division of debts can be as important as fighting for certain assets during divorce.