If you’re going through a divorce, then you already likely know that you’ll ultimately have to divide the property that you’ve acquired during your marriage before settling your case. What you may not realize, though, is that you also have to divide the debts you amassed while married too.
The division of debts forms part of the property division process. There are two primary ways to handle debts, and each one comes with special points for you to consider.
Balance out asset division
Some spouses split up the debts in a way that balances out the asset division. For example, if there aren’t other assets of equal value to the home, then the spouse who retains the house may have to take on more of the marital debt so that the split is a bit more equitable.
Pay off debts
Another option you two can pursue is to sell off some assets to cover the marital debts. This way, neither person has to worry that the other person won’t pay the debts. Unpaid debts can come back to haunt both parties if one spouse doesn’t pay them. Creditors don’t have to abide by the terms of the divorce settlement, so any of your joint unpaid debts may appear on both of your credit reports, reducing your score.
If you’re going through a divorce, then you’ll want to keep in mind that your property division settlement will not only impact you now but also in the future. This includes how you decide to split your debts. This is why you should cautiously make decisions that you know are in your best interests.