Divorce and Debt: What You Need to Know
Marriage is not only the joining of two hearts, but also a merger of assets and debts. Everything accumulated during your marriage, from property to credit cards to medical bills, is all divided as part of a divorce.
You May Be Liable for Your Spouse’s Debt
Depending on which state you live in, you may still be held accountable for debt that is split up during the divorce if the loan agreement is also in your name. However, this does not apply to assets acquired by either party before marriage in Florida.
Dividing Debt is More Difficult than Dividing Assets
Creditors can collect from both parties on a loan contract, despite how the debt has been split during the divorce. So if your spouse agrees to pay off a credit card and then defaults on the payments, you can be liable. It is good practice to pay off as much debt as you can before finalizing your divorce.
Refinancing Can Remove Your Name from a Loan
By refinancing a loan, your name can be removed from the agreement. This can protect you from any liability in case your spouse defaults on the loan.
Make sure you understand your rights before you sign a divorce settlement. Learn more at our sister site divorcehelper.net where our partnering Experts in Marital and Family Law publish trending news and articles relating to finance and divorce daily.