Untangling Your Debts During Divorce
Your divorce will have a significant impact on your financial future. This impact is a given, and the division of your marital property will play a profound role in this matter. However, it is also essential to take your debt load into careful consideration as you move forward in the divorce process.
Most of us carry some debt, and most people address their debt responsibly. However, during the extraordinary times we find ourselves in, many people have had to rely upon debt more heavily. The COVID-19 pandemic has left many couples facing layoffs, furloughs, pay reductions, increased child support, and more – and as a result, many have turned to credit as a means of making it through their financial difficulties. When you couple this with the fact that the overwhelming stress and uncertainty the pandemic has put a significant strain on many relationships, including marriages, it inexorably leads to increasing numbers of divorcing couples facing considerable debt.
Is It Community Debt?
You may understand the division of community property well enough, but getting down to how your debt will be divided upon divorce can be more complicated. The debt that you and your spouse take on together and assign both your names to during the course of your marriage is much like community property and will be divided accordingly. If any of the following apply, however, it can complicate the matter considerably:
The debt belongs to only one of you but is in both your names.
The debt belongs to both of you but was secured by the separate property of only one of you.
The debt benefitted both of you but is only in one of your names.
The debt came with one of you into the marriage (such as a student loan).
This list could go on, and it is not difficult to see that the matter can quickly become quite complicated.
The Division of Debt in Your Divorce
You have heard it before – no two divorces are exactly the same – but when it comes to the division of considerable debt, it often takes things to the next level. Determining how to divide such debt can be a delicate process, but some common balancing approaches can help:
Selling community property to pay down the debt before finalizing the divorce
Awarding a disproportionately large share of marital property to the spouse who shoulders more of the debt
Awarding increased alimony to the spouse who takes on greater debt
Agreeing to split the debt down the middle
Dividing the debt according to agreed-upon ownership
It is important to remember that if your name is on a debt, a court order assigning the debt to your ex does not mean that the creditor will not come after you if your ex fails to continue making timely and compliant payments. Your divorce decree should include having your name removed from the debt in question.
Discuss Your Concerns with a Dedicated Killeen Divorce Attorney Today
It is essential to take your debts into careful consideration as you move forward with the divorce process. This fact is why attorney Brett Pritchard at The Law Office of Brett H. Pritchard in Killeen, Texas, is committed to employing his considerable experience in the matter to help you obtain a fair division of debt – in support of your rights and your financial future. Your case is important, so please do not hesitate to contact us online or call us at 254-501-4040 for more information today.