When a couple divorces, they may worry about how their assets will be divided. However, if the couple has debt, then there is the additional issue of determining who will be held responsible for any debt that is owned by or between both parties.
For instance, if one party is awarded more property than the other in the settlement, then they may also have to deal with more debt obligations to compensate. Here, we will discuss debts, such as mortgage debt, and how they are divided in a divorce.
Credit Card Debt
If your spouse has any credit card debt that is in their name only, then you will likely not be responsible for that debt. However, if there is joint credit card debt, then most states or provinces will consider marital debt to be any and all debts that have built up over the duration of the union, regardless of whose name is designated on the account.
In other words, it is more than likely that both parties will be held responsible for paying off the credit card debt, regardless of who was making the payments while the couple was still married.
If both parties have their names on the mortgage, then the easiest solution would be to sell the property and split the money evenly between both parties. However, selling the home may take some time. Most experts will suggest that both parties try to agree on a temporary agreement regarding how much each should contribute to the mortgage so that the credit of both parties will not be compromised.
It should also be noted that mortgage debt will usually be the responsibility of the party who makes significantly more money than the other. Or, in other cases, the mortgage debt will be the sole responsibility of the party who received full physical custody of the children.
In such a scenario, one party would need to buy out the home equity of the other’s before they move out of the family home. In other words, while the easiest solution would be to sell the house and split the money, another option would be to buy out your significant other (or vice versa) before parting ways.
Automobile debt can prove to be more challenging than mortgage or credit card debt in some cases, especially if both spouses’ names are on the auto loan. However, one sound strategy to deal with an auto loan debt is to speak to the lienholder and request auto refinancing without your spouse.
Or, you can ask that automatic payments be withdrawn from your spouse’s account instead. Unfortunately, more often than not, what ends up happening is one party refuses to make payments, so the other party gets stuck with the debt.
As such, failure to make the necessary payments will lead to the credit of both parties being tarnished, often beyond repair. To learn more about how mortgage, auto, and credit card debt are divided after a divorce, please visit our website.