By: Joemar Pasco
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What Happens to Property and Debt in Divorce?
Did you know that according to the American Psychological Association, about half of all marriages will end in divorce at some point? That means when the marriage breaks up, so does the debt. You would think that each person would, ideally, want to take care of their debt. You would think that each party would bear the brunt of their responsibility concerning money and property. That is not the case, however.
Here are the 5 Things You Should Know While You File
The Legal Arguments For Debt
Do you live in a community property state? The debt you incurred will not be divided up according to who did the damage. In a community state, each party will be responsible for a portion of the debt.
Then, there is the question of those living in an equal distribution state. You could be responsible for paying down your husband’s debt without knowledge of what he did or did not do. The same thing applies if you are the husband. The courts will expect you to pay down any debts in your name.
In the bank’s eyes, a loan or agreement created by both parties overrides a divorce. Your wife could have racked up $100,000 in debt. As the husband or former husband, you are responsible for at least some of that.
You could take your ex to court over overdue and past due payments that have not been made yet. The only problem is that by the time you take it to court, your credit could already be wrecked. That goes for a single or joint account. You are affected as long as your last name is attached to the records., regardless of who is doing the damage.
Before and After Divorce
You could try to arrange some kind of plan before the divorce is final. You should also avoid leaving joint accounts open after the marriage is over. Your ex could easily rack up debt on your card and leave you with the bill.
What About Property?
The Equitable Distribution Law is designed to divide the property during a divorce. Sometimes it does not always happen equally, but the courts do try to make it as equal as possible.
Two Kinds Of Property
There is something called marital property. That is the property the two of you buy as a married couple. Say, for example, a married couple buys a home, but the wife’s name is on the deed. The husband could be entitled to some value from the home.
There is something called separate property. That is the property either of you owned before the marriage. That can also include inheritance r personalized gifts. These are still considered separate as long as only one person’s name is on the title.
The courts will usually decide how the property gets distributed based on the above criteria. The courts will also decide how to move forward with paying down the debt by looking over things like income and how long a marriage lasts.