As part of the divorce process, one of the main issues will be how to divide your assets. Dividing your property also includes dividing your liabilities and your debt. This may include credit card debt, a mortgage or equity line of credit, medical expenses and student loans. Sometimes the debt is in one spouse’s name but not the other and often both names are on the account.
Property division, especially debt division, remains one of the more contentious issues in divorce. Spouses may accuse the other of racking up credit card debt for personal use. Others may have incurred marital credit card debt but the account is in their name only. Regardless of the issues, unwinding marital debt is as important as awarding marital assets.
Some considerations when dividing up debt
One of the most important tasks to complete before you agree to any division of debts is to get a comprehensive list of all your assets and liabilities. Get a recent statement that includes a balance.
Once you have all of the information regarding the debt, it can help to organize it in a spreadsheet with balances and type of expense. For example create one section for real estate, one for credit cards and one for student loans as well as any other type of debt you may have.
Preparing this information is helpful to understanding your complete financial picture. Once you are able to get a handle on where your debt is and what type of debt it is, then you can put it together with assets to start to address the property division.
Consult with professionals
Once you have a handle on your debt, get counsel from an attorney or financial professional on how to tackle the division. You will want to take everything into account and it may be that not all of it is your responsibility or maybe more of it is your responsibility. You need to understand how things may work legally before you agree to anything. In addition, a financial professional may be able to direct you to some effective solutions to eliminating or reducing your debt.
Here are some additional tips to consider when dividing debt. Whatever you do, make sure you take the time to carefully consider all your obligations as you work through this process.