Dividing debt in divorce

| May 15, 2018 | Uncategorized

If you’re like most divorcing couples, you have to divide not just assets that you’ve accumulated during the marriage, but debt as well. The most common joint debts are usually a mortgage, auto loans and credit cards.

The mortgage is typically the largest single debt a couple has. What happens to that debt depends on what the couple decides to do with the home. Some couples choose to sell the home and split whatever proceeds they get from it. If one spouse wants to keep the home, it’s best for the other one to get off of the mortgage. That means the spouse who remains in the home has to refinance it as a single borrower.

Auto loans are usually considerably smaller and easier to deal with. The spouses may each decide to keep one car and refinance the loan for that car they’re keeping in their own names, for example.

Credit card debt can be tricky. As far as the credit card issuer is concerned, the debt belongs to both of you. The company isn’t likely to move your portion of the debt to another card. Spouses will sometimes elect to each keep one or two of the cards as individual cardholders. You’ll have to work out with your attorneys how to divide the debt that you have on those cards.

Most Florida family law attorneys recommend that spouses don’t keep their names on any debt product over which they no longer have control. You may decide it’s easier to keep your name on an auto loan or credit card because your spouse has promised to pay it off quickly. However, if he or she fails to do that, you’re still considered equally responsible for the debt. If it goes unpaid or is paid late, your credit rating will suffer.

Each couple’s debt situation is different. Your attorney can work to help ensure that you and your spouse divide your debt fairly and that your credit rating won’t suffer as you go about that process.

Source: Wise Bread, “What Happens to Debt After Divorce?,” Holly Johnson, accessed May 15, 2018

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