When it comes to separating lives in a divorce, one thing that can complicate matters is finances. Debts, bills, mortgages, child care, and other assets will need to be negotiated during the divorce proceedings. While divorces can be emotional, figuring out financial matters should be done with care and consideration. Dividing debts during divorce can be tricky, but with the help of a lawyer, you can hopefully negotiate with your spouse and figure out payments without adding additional stress to your divorce.
Working to understand debts and splitting finances is easier when you work with a divorce lawyer. Our lawyers at KNK can help provide insight into debts and assets while you are going through a divorce. Read below for more of our tips and how to split debts after your divorce is final.
Marital Debt Vs. Separate Debt
Marital debt and separate debt are going to be discussed separately when you navigate your divorce. Debt that is accumulated during the marriage is considered marital debt and will fall on both party’s shoulders when dividing debts. Factors such as who incurred the debt, who benefited from it, and each spouse’s ability to pay for it will all be discussed during divorce proceedings.
Many marriages develop joint debts. These can look like car loans, mortgages, credit card debt, and personal loans. Navigating these debts while you are getting a divorce can be hard to split in a way that feels even. No matter whose name is on the account, you will have to divide these in the divorce proceedings. Joint debts are considered marital debts and are subject to splitting during a divorce.
Who Is Responsible?
The general rule of thumb when trying to divide debts during divorce is the name on the loan agreement is the responsible party. There are a lot of legal factors that can come into play when dividing debts during divorce. For example, cosigners or borrowers who signed on a loan are still responsible for payment. Verbal agreements also won’t hold up in court.
Negotiation Of Future Payments
When getting divorced, there is a lot of compromise and negotiation involved. Approaching the situation to find a mutual agreement will help debts seem less daunting. Depending on the type of debt, some debts will be split in half, while others will be split to benefit the party with lower income.
Some spouses may need to take on debts individually or look at refinancing to make the payments more manageable. Some divorcees may decide to split the debt evenly until it is paid, even if one spouse’s name was not listed on the original loan agreement.
Plan For The Long Term Impact
When determining how to split the debts, consider how it will affect you and your spouse in the long term. Large debts can be a burden that lasts for years and limit your ability to make large purchases in the future. Consider if spousal support may be needed after the divorce. Will a division of assets ensure better financial stability? Is your job or income about to change? These factors and future conflicts could change the way you split debts after a divorce.
While not every part of your divorce will be fair, dividing debts, assets, and other finances with compromise on both party’s part will help ensure a more reasonable outcome.
Finalizing Dividing Debts And Coverage Agreement
Once you, your spouse, and your lawyer have worked out a debt agreement, you will formalize it legally. You will need to draft a divorce settlement that outlines, in detail, each party’s contributions. This contract is legally binding and will help provide clarity moving forward. This will protect you if your spouse refuses to pay for debts in the future.
How Your Divorce Lawyer Can Help
Our lawyers at KNK can help you have an equitable distribution of debts and assets. Consulting with a lawyer can help provide some mediation during discussions with your spouse. The dissolution of marriage doesn’t have to mean the loss of assets or the loss of financial stability.
Kaufman, Nichols, and Kaufman can help you navigate the complexities of divorce with ease. Our lawyers are the top choice in Utah for family or divorce matters because we help you protect your rights and interests. Divorce is sometimes necessary, so you should find a lawyer who is in your corner every step of the way.