During the divorce process, you and your former spouse may take considerable time to divide assets. But the process of dividing debt can be more complex than dealing with property, especially when the final decisions can affect your finances and credit scores. Even if you split loans and other debt equitably, there can be issues stemming from further details, such as your income and roles designated in the loan agreements.
Taking steps to organize debt
Before beginning the division process, collecting all the debt-related paperwork, including agreements and credit reports, is crucial. Organizing these details can help determine how to properly allocate the debt between you and your former spouse.
Then, you can review the fine print of these agreements and take note of what your role is. Whether named as an authorized user or joint owner, you can discuss the arrangement with your former spouse before deciding what to do about the loan.
During the process, the divorcing couple usually has numerous options for most debt types, including paying them off, drafting an agreement so one party is responsible for paying it off, or not changing anything. Each choice can have pros and cons, depending on the family’s circumstances.
Determining the most appropriate course of action
Each household can be unique, requiring specific solutions when addressing debt issues. Sometimes, one party earns more than the other, making it challenging to split the debt fairly. Other times, the divorcing couple has a good enough relationship to continue paying off the loan as they paid for it during the marriage.
If you and your former spouse are unsure how to proceed, you can seek legal counsel before deciding. Having legal insight can help sift through options and set an arrangement that will not put too much financial burden on you or your former spouse.