Divorce prompts you to answer many questions while addressing a variety of concerns. While property division is likely to take precedence over debt, you can't lose sight of your liabilities.
Early on, it's critical to make a list of all your debts, both separate and joint. Doing so allows you to formulate a plan for splitting the debt, which will help you better understand the impact it will have on your life in the future.
You may find that you have more liabilities than you originally believed, with these among the most common types:
- Credit cards
- Car loans
- Personal loans
- Home equity loan or home equity line of credit
Some of these debts are easier to deal with than others. For example, if you have joint credit cards, you may be able to pay off the balances with money that you have in a bank account. This allows you to move through divorce without the joint debt hanging over your head.
On the other hand, a mortgage is often more difficult to deal with, as it's attached to an asset that both individuals may covet. If you both want to remain in the family home post-divorce, you could find yourself with no choice but to find common ground. And that's easier said than done.
Additionally, it's critical to make note of what is separate and what is joint debt. This often comes into play if your spouse brought a lot of debt into the marriage, such as credit card debt or student loans.
As long as you didn't commingle the debt, such as using a personal loan to consolidate it, you can argue that you shouldn't be responsible for paying any of it in the future.
As important as it is to fully understand your assets and how they're divided, the same holds true of your liabilities. If you neglect to maintain a firm grasp of your situation, you could end up responsible for debts that you shouldn't have to pay.
An understanding of your situation and knowledge of your legal rights will help you formulate a property and debt division plan that puts you in the best position possible in the future.