What Happens to Marital Debt During a Divorce?
If you’re planning to consult a family lawyer about filing for divorce, one of your first considerations may be the division of assets such as the house and savings accounts. However, you should also consider marital debts. As your divorce attorney can explain to you, the division of liabilities is often a tricky situation. It’s important for you to be fully aware of your financial situation. If your spouse is responsible for handling financial documents, you’ll need to obtain copies of the bills, financial statements, and other documents pertaining to your assets and debts. Your divorce attorney near La Plata can help you understand how the court may address these financial issues.
Paying Off Debt Before Filing for Divorce
If you and your spouse have a significant amount of debt held in both of your names, your attorney at law may recommend that you and your spouse pay off all of the debt before filing for divorce. Doing so will likely reduce the assets that will be divided between the two of you; however, it can protect your financial standing in the future. Even if a judge orders your spouse to pay the car loan, for example, if your name is on the loan, you can still be held liable for it. Lenders are not required to recognize divorce agreements. By paying off all debt first, you can avoid this potential pitfall.
Including an Indemnity Clause
If it isn’t feasible to pay off all debts prior to filing for divorce, your divorce attorney may negotiate for the inclusion of an indemnity clause in the divorce agreement. This means that if your ex-spouse fails to pay a loan for which he or she was responsible and you were held liable as a result, you can take your ex-spouse back to court to demand compensation.
Dividing Assets and Liabilities
Family court judges try to equally divide assets and liabilities among spouses filing for divorce. Sometimes, they can be used to counteract each other. For example, if your spouse is going to receive the family car, he or she might also be responsible for the car loan. However, each state has its own laws with regard to the division of marital assets and liabilities. Your divorce attorney can offer specific guidance with regard to what you might expect.