What happens to debt in divorce?

When couples decide to divorce, splitting up marital assets often takes center stage. However, couples do not only have dividing their possessions and savings to worry about. They also have to divide their debts. Knowing how these debts are split can help those involved manage their expectations and prepare for financial changes.

Who owns a couple’s debts?

Marital debt includes all financial obligations gathered during the marriage. This often includes credit card debts, mortgages, car loans, and personal loans. Debts in one spouse’s name might seem like their sole responsibility. However, if the debt benefited the family, the court might consider it marital.

However, some debts are the sole responsibility of one person. For example, debts from before the marriage are usually the responsibility of the person who incurred them.

What happens to marital debts during property division?

The division of debts in a divorce largely depends on where you live. In states like Missouri and Oklahoma, courts divide debts fairly. In Arkansas, the courts divide both assets and debts gained during the marriage as equally as possible unless the court decides that another arrangement is more fair. The final decision will account for factors like each spouse’s financial situation, earning potential, and contributions to the marriage.

You can take steps to protect your financial health when dividing debt. These include:

• Know your debts – Make sure you have a detailed list of all debts. Knowing who owes what and why will make things clearer.

• Understand how your state divides debt – Learn about your state’s laws on how to divide debt. This knowledge will support your negotiation efforts.

• Consider future financial impact – Think about how taking on certain debts might affect your financial health in the future.

• Use professional help – Work with financial advisors and experienced family law attorneys. They can guide you and protect your interests during negotiations.

How you divide debts in a divorce can affect your financial future. By understanding the laws and considering negotiated agreements, spouses can aim for a fair and lasting solution.