Division of assets is one of the more complicated parts of any divorce process. As Connecticut residents experienced with divorce can attest, this process can become even more challenging if one or both parties fail to keep up on debt repayment requirements as spelled out in a divorce agreement. However, there are steps that can be taken to help smooth the road to an equitable division of debts at the end of a settlement.
Determining which accounts belong to whom is immediately important. Generally speaking, the party that signed “on the dotted line” for the line of credit or loan is responsible for paying it back. If the agreement was signed jointly, both spouses are responsible for the payments. This can be different if one spouse is an authorized user, which means they are entitled to access the line of credit but may not be responsible for paying it back. These are important distinctions to make early in the process.
If it is possible, it can be helpful to settle outstanding debts prior to filing for divorce. This can help eliminate the issue of debt division altogether, though it is likely that not all debts will be paid back by the time the couple is ready to approach the negotiation table. If this is the case, it may be helpful to seek outside assistance in determining how best to approach debt division.
Divorce can be a complicated process, and that complication can be exacerbated when finances are considered. Connecticut residents facing divorce have multiple avenues of support available to them in order to learn more about debt division. The more knowledge that can be accrued prior to the beginning of a divorce proceeding, the better state both individuals will be in to deal with the challenges that arise.
Source: foxbusiness.com, “Debt and Divorce: 5 Steps to Make a Clean Credit Split”, Dawn Papandrea, July 11, 2014