After a marriage has lasted years or even decades, it is likely that the couple has amassed considerable assets. From vacation properties and a family business to deferred compensation packages and retirement funds, these high asset divorces can quickly become mired in complications. One thing nearly all divorcing couples must address, however is the division of debt responsibility.
During a marriage, the couple will likely find their finances to be co-mingled. Whether they both share a joint charge account or a large purchase is made in both names, there are numerous debts that must be addressed through the divorce process. The most common can include:
- Credit card debt: Credit cards are generally the first element of debt division that a divorcing couple thinks of. Many financial experts advise that any joint or shared charge accounts be paid off and closed out prior to the divorce process to relieve a significant amount of stress.
- Mortgage debt: The divorcing couple is generally presented with three options when discussing the house. They could sell the house and split the profits. One spouse could buy the other out. Or they could continue to own the property jointly, renting it as an income property. No matter the ultimate decision, the property’s value must be weighed against the remaining debt.
- Vehicle loan debt: The process of property division will usually include the family’s vehicles. Cars, trucks, motorcycles, boats or other recreational vehicles must be divided between the parties. Unfortunately, it is not uncommon that one or more of these vehicles has debt associated with it.
- Medical debt: Depending on whether your state is “community property” or “equal division” your medical debt could be handled differently. It is wise to discuss your unique situation with an experienced family law attorney, so you fully understand your options.
Ultimately, debt responsibility can run into the hundreds of thousands of dollars. While a divorcing couple might at first only be concerned with the division of physical and digital assets, the division of debt can play a significant part in both party’s’ independent financial futures. Along with child support, spousal support and property division, debt division is a major factor in determining the overall financial picture.