The property division process during a divorce requires more than just splitting up bank accounts and making arrangements for other shared property. Couples must also negotiate terms for their shared debts. Mortgages, car loans and credit card balances are among the financial obligations people may have assumed during a marriage that they must divide when they divorce.
How can divorcing spouses ensure that their division of debt is fair and reasonable?
Evaluating debts carefully
In some cases, spouses may have entered the marriage with pre-existing financial obligations. Those debts may remain their separate responsibility if they divorce. Most of the time, debts taken on during a marriage are part of the marital estate, even if the financial account is only in the name of one spouse. However, there are sometimes exceptions to this rule.
If either spouse intentionally hid their financial behaviors from the other and accrued debt while engaging in behaviors that damage the marital relationship, such as funding substance abuse, gambling or conducting an affair, the courts may agree that those debts constitute dissipation of marital property and may not necessarily be part of the marital estate. Similarly, excessive spending in the weeks leading up to a divorce filing or immediately after a divorce filing could also constitute dissipation.
Divorcing individuals often need financial guidance as they review financial records to determine what assets and debts are divisible. Consulting with a lawyer familiar with the laws and prior rulings that influence financial determinations during divorce can help people identify what debts they may need to help pay and what debts they can exclude from the property division process.