Divorce is never easy, especially when it comes to splitting up assets and debts. In most cases, the married parties must agree on how to divide the martial belongings, both what is owned and what is owed. While assets are easily divided, debt is a little more tricky. Most martial debt that is in both of the couple’s names can affect both people for as long as the debt exists, regardless who the divorce papers say is in charge of paying it back. Before filing for divorce, couples should take in to consideration how it will affect their debt and credit situation.
Divorce decrees are not recognized by most lenders. If a marital debt is in both names of the couple, then it is still considered owed by both regardless of what the divorce court or papers have declared. For example, if the couple bought a boat together and the wife is awarded the boat and the loan that goes with it, the husband is still responsible if the payments are not made. Unless the wife is able and willing to refinance the boat in only her name, the husbands is still expected to make the payments if she does not.
Since many marital loans and debts may take years or even decades to pay off, as long as they exist, the couple is still tied to each other. One way to handle this is to separate debts into one or the others name only before the divorce. Another is to pay off the debts together before the divorce. For large ticket debts like homes or vehicles, it may be best to sell the property versus having one person take over the payments while the other person’s name is still attached to the debt. By dealing with the debt issue ahead of time, both people can go their separate ways without having a financial tie for years to come.