People who are going through a divorce often think about assets when they’re discussing property division. While that’s an important part of the process, they also need to think about how they will divide debts. Marital debts don’t disappear when a couple gets divorced.
When a couple goes through a divorce, debts must still be paid. This is done either by assigning each debt to one of the parties or by liquidating assets to pay off the debts. These marital debts can include things like mortgages, vehicle loans, credit cards or other financial obligations.
Creditors don’t have a role in the divorce
One of the most common misconceptions is that a divorce decree can erase or transfer debt obligations with creditors. In reality, creditors aren’t bound by divorce agreements. If both spouses’ names are on a loan or credit card, the creditor can seek payment from either person, regardless of what the divorce settlement says.
For example, if one spouse is assigned to pay a joint credit card debt but fails to do so, the credit card company can still go after the other spouse. In such cases, the spouse who paid the debt may have to return to court to enforce the divorce agreement and seek reimbursement.
To avoid these complications, divorcing couples are often encouraged to pay off joint debts, refinance loans into one person’s name, or close joint accounts before the divorce is finalized. This helps prevent future disputes and protects both parties’ credit.
These situations can become complex, particularly if there’s considerable assets or debts. Working with someone who’s familiar with property division standards and the circumstances may be beneficial for anyone going through a divorce.
