We’ve covered how to financially survive a divorce and dividing assets, now it’s time to get down to the brass tacks – debt. Some couples come into a marriage with debt, as we talked about in one of our blogs “So You’re Getting Married”, and some couples accrue debt during their marriage. Either way, when a marriage comes to an end, that debt must be dealt with.
One approach to addressing marital debt is to pay it off before filing for divorce. This requires a couple who can speak candidly to each other regarding this topic as well as two people who are willing to accept that debt is generally mutually created and accept joint responsibility. More often than not, this situation is just not a reality. Debt is quite often a major instigator of marital breakdown.
If the aforementioned solution is just not a possibility, debt will be divided during the divorce negotiations. What most people don’t realize is only marital debt will be divided in the divorce. Marital debt is debt acquired to establish marital property such as the family home, cars, business, children’s schooling, etc. Debt that has been incurred for the exclusive benefit of one spouse, such as a University degree, typically won’t be split. These types of debts are referring more to the future of the person and less about their previous spending habits. While this sounds manageable, keep in mind creditors do not consider the outcome of divorce proceedings and consider both spouses responsible for full payment.
Now that we’ve covered some major financial aspects of divorce, it’s time to look forward. It can be a shock to go from a multi-pay home to a single pay home. Budgeting under these new conditions can be a challenge particularly after a significant length of married time. Remember, you’re not alone and there are resources to help you. Financial Planners are a great asset in establishing a future and helping you create a plan to reach it. Be proactive during the process and contact us today, let’s get you started on the right path to your new “you”.