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Debt division important part of property division settlement

| Jun 11, 2020 | Divorce, Property Division |

What will happen to the house, who will get which car and even who will get the living room furniture are common questions that are often asked as part of a Virginia couple’s property division settlement. These are all important considerations in the divorce process. However, something that may prove to be just as important is who will get which debt.

In many instances, automobiles are titled and financed in both names. This means that both individuals own each vehicle and are responsible for making the loan payments. In the property division settlement, it is common for each individual to retain possession of the vehicle he or she currently drives and to assume responsibility for the loan payment on this vehicle. While this is true in terms of the divorce, it does not change the fact that the lender will hold both individuals responsible for repayment. If possible, it may be a good idea to refinance each vehicle so that the other spouse can be removed from the title and the loan.

Credit cards are another area in which both individuals may have joint liability. If the credit card account is jointly held, then the credit card company will look to both individuals for repayment even if the divorce decree indicates that only one is responsible. It may be necessary to close joint accounts and transfer any unpaid balance to an individual account. Additionally, if the credit card account is in only one name with the other individual listed as an authorized user, the individual responsible for the account will want to make sure to remove the authorized user to prevent further charges being made.

While who will get which asset is an important consideration as a Virginia couple negotiates their property division settlement, who gets which debt can be an important financial concern. Each individual will now be responsible for household bills in addition to these debts. An unexpected bill because the other individual failed to make a payment can become a serious budgeting problem.