Division of Debt in Divorce
Concerns about Debt Division? Sullivan Taylor, Gumina & Palmer, P.C. Will Work with You!
Dividing debt during a divorce is just as important as the division of marital property. Any loans or lines of credit you and your spouse jointly signed become your joint responsibility. Additionally, depending on your income, assets, health, and personal situation, you could be held accountable for debt on credit cards and loans that are not in your name but were incurred during the course of your marriage. Our attorneys work closely with clients in matters related to the division of debt during a divorce. We take steps to prevent you from being saddled with debt that isn’t yours and propose measures for negotiating a settlement that doesn’t leave you at a disadvantage.
Debt That Should Be Divided, Debt That Can Be Divided
While each case is different, typically the following kinds of debt CAN be subject to division:
- Jointly signed loans
- car loans
- home mortgage
- Jointly held credit cards
- Debt on jointly owned company
- Credit card debt acquired during the marriage
Assigning Debt – Why You Can Be Held Responsible for Debt You Didn’t Incur
The court will take into account your financial situation and earning potential, as well as that of your soon-to-be-ex-spouse. If, in the opinion of the court, your financial and employment situation is better than that of your ex-spouse, you may be required to pay off debt on loans or credit cards that are not in your name.
Additionally, even if the court assigns credit card debt to your ex-spouse, if he or she fails to pay what is owed and your name is on the account too, creditors may initiate collection actions against you. Since a divorce settlement is a private contract, its terms do not prevent a bank or creditor from enforcing the terms of its contract against you.
Likewise, if your spouse worked to put you through school and ran up debt on his or her personal credit card to pay for the needs of the household, you may be required by the court to accept some or all of the debt involved.
Divorce and the Division of Debt – Protecting Our Clients
At Sullivan Taylor, Gumina & Palmer, P.C., we’re very careful and thorough in reviewing our client’s financial situation. Working with you, we obtain a copy of your credit report and information on credit cards and loans in order to determine how much is owed. If a mortgage is involved, we explain why you must refinance rather than offer a buyout. Our attorneys are also prepared to petition the court to enter a restraining order in order to stop your spouse from incurring more debt on jointly held accounts.