Virtually everything has to be divided during and after the divorce process, including your debt. Generally, all debt accumulated during the marriage is labeled marital debt – i.e. both you and your spouse are responsible for paying that debt back. In the case of credit card debt, usually creditors don’t care that two people are going through a divorce or are divorced, they simply care about who is named on the account. If both parties are named on the account, then in the eyes of the creditor, you are both responsible for the debt. Here is what you can do to protect your credit and deal with the debts:
Step 1: Review the debt with your attorney and distinguish which debt is marital and non-marital
It’s best to know which debt is marital, i.e. debt where both you and your spouse are liable, and which are non-marital. The debts to review include, car loans, mortgages, student loans, and credit cards.
Step 2: Separate Accounts
If your spouse and yourself have numerous joint accounts, it’s best to discuss with your attorney how to move forward and separate the accounts if necessary and possible. It’s best to get the advice of your attorney before removing your spouse and limiting your spouse from access to joint credit cards and joint accounts, as that may result in more litigation which you will want to avoid.
Step 3: Pay Off Debt
If you have the ability to pay off your non-marital and pre-marital debt, then you should do so. As far as the marital debt, generally parties are equally responsible for marital debt – BUT, this can change depending on how large the debt is, the difference in income between you and your spouse and the disparity of ability to pay said debt. A court has the discretion to allocate the debt equitably, i.e. based upon your financial circumstances. So, paying the equal share of debt prior to discussing your options with your attorney and/or a full settlement being drawn out may not be the best way to move forward. It’s best to discuss reimbursement of payments, allocation of debt with your attorney prior to making payments on your own toward that debt.
For more information and representation in your divorce, contact us today for your consultation !