Assigning debt responsibility can be a challenging aspect of any marriage that has lasted years or decades. Financial elements can quickly become intertwined making it difficult to decide who will take responsibility for what debt. These three tips, however, can make it easier to proceed through the debt division process.
- Close shared credit cards: When divorce becomes a reality, couples should quickly assess their joint accounts. These debts should be paid off and the accounts should be closed. Failing that, the couple can come to an agreement over who will accept debt responsibility and open a new card in his or her own name. The shared debt can be transferred to the new solo account, and the joint card can be closed.
- Examine your options for the home: In general, the largest financial transaction a married couple will make is in the purchase of their home. When divorcing, the couple must decide what will now happen to this property. The couple will commonly have three options to choose from: sell the house and split the profits, one partner buys out the other and retains ownership, or the couple continue to own the property together possibly with the end goal of renting it and dividing the proceeds.
- Pay off the car: While it might be easier said than done, paying off any outstanding vehicle loans can clean up your debt prior to the divorce. A discussion can be had around who will keep the vehicle (car, boat, truck, motorcycle, etc.) and debt responsibility can be determined based on that. Even if the vehicle cannot be paid off, it might be possible to refinance the loan, putting the car in only one spouse’s name.
A divorcing couple will likely find these decisions easier to navigate on their own before they are in a room with their attorneys, a divorce mediator or a judge. Ultimately, their decisions can be presented to the court for approval, but they can make the process run smoother and more efficient by tackling some issues beforehand.