If you’re going through a divorce, you likely know that you have to divide the marital property. You may not realize that this includes more than just the assets that you’ve accumulated during the marriage.
Getting divorced doesn’t do away with debts. These will have to be handled as part of the property division process, but there are a few considerations to think about as you’re working through this.
Debts can be assigned or paid
During the property division, debts are often assigned to a party. Marital debts might be used to balance out the division of assets. The issue with this option is that creditors can hold you and your ex liable for the balances if they aren’t paid. This means that if you or your ex doesn’t pay the assigned bills, the other party can receive a negative mark on their credit report.
If debt assignment is used for property division, it might be a good idea to have a provision that all debts must be transferred to an individual account. This can help to ensure that one party doesn’t suffer a hit to their credit history if the other party doesn’t pay.
The alternative to debt assignment is paying them off. If assets are available that can be liquidated, that may give you the opportunity to pay off what’s owed. Even if this doesn’t cover the entire balance owed, it may lower the balances enough that they’re easier to pay off.
Working through the division of marital assets and debts can be challenging, but it’s necessary so you can legally end your marriage. It can be beneficial to have someone on your side who can assist you with determining your options and how they might affect your financial future.