Like other marital assets such as the family home, the law considers marital debt as marital property that should be dealt with in a divorce. But what exactly is marital debt? In general, all debts that you and your spouse incurred while you two were married are considered marital debt – that is, unless a creditor is going after a separate property for payment from you or your spouse.
Debt Division in Divorce
Generally speaking, you have two options for debt division during divorce. The first one is to repay all debt prior to filing for a divorce and the second option is to determine which spouse is liable for specific debts when negotiating the divorce settlement A divorce attorney in Nassau County could clarify this further for you, as well as help you decide on an ideal plan of action.
The issue with debt division when negotiating a settlement is that your ex-spouse might not be willing to pay what she or he needs to pay, which would leave you still liable for repaying the debt because lenders are not legally required to acknowledge divorce court orders.
This leaves you the option of settling all debt prior to your divorce. This would enable you to resolve all your finances that you have tied to your spouse. If, however, this is not possible perhaps due to lack of funds, you have no choice but to let the court divide the marital debt. During this process, the court will determine which of you incurred which debts and who among you benefited from those debts.
To illustrate, if your soon-to-be-ex-spouse ran up credit card debt due to various car upgrades and only he gets to drive the car with all the bells and whistles, the court would most likely find him liable for that debt. Take note though that in general, the court will consider a vehicle, home, or any debt that you incurred jointly with your spouse with intent to establish the marital property as joint marital debt.
Key Takeaway and Other Vital Things to Consider
If possible, try to eliminate all debt before your divorce. If this isn’t possible, it’s very important that you get a clear handle on your finances, so you help make certain that the court deals with all marital debts and assets appropriately. It’s also vital to note that each state has its own laws for debt division and that if you have a prenuptial agreement, the provisions in it will also come into play during your divorce settlement.