People who are going through a divorce often become focused on dividing the property that they’ve amassed. While that’s important, it’s also critical for them to recognize that the marital debt also has to be divided.
There are a few things that people going through a divorce should remember as they’re trying to decide what they’re going to do about debt. Understanding the options may help them to make informed decisions.
Plan for assets can determine how debts are handled
How to handle the debts starts with deciding what to do with the assets. Some couples opt to sell off assets so they can pay marital debts. This gives them both a clean slate with their finances as they embark on their new life.
The other option is to divide the debts, with each party being responsible for specific debts. The issue with this option is that one party failing to pay for their share can negatively impact the other party’s credit. Because creditors aren’t part of the divorce process, they don’t have to abide by the terms so they can continue to hold both parties liable for joint debts.
Property division must be handled in a logical manner, so it’s critical that both parties review each option. Ensuring they think about the impact that debts can have on their future may be beneficial. Working with someone who’s familiar with these matters may help them to decide what’s in their best interests.