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Ways to divide marital debt

On Behalf of | Mar 30, 2022 | Family Law

If you are getting divorced, you need to make arrangements for any debts that you and your ex-spouse incurred during your marriage. The determination of who is responsible for specific obligations is usually made in a property settlement agreement.

Different options are available for divorcing couples to split the debts equitably.

Pay off balances owed

As part of the property settlement agreement, the parties will determine the distribution of assets. If a joint debt exists, you may want to agree to pay the liability off. You could decide to liquidate a martial asset to pay the debt. A good example is a mortgage owed on the house. The divorcing parties often agree to sell the residence to pay off the mortgage.

Refinance the debt

Another way to divide up marital debt is to have one person refinance the debt so that it is only owned by one of the spouses. If there are any debts secured by property, you would want the spouse who gets the property to take out a new loan so that they are the only person obligated on the liability.

Set up automatic payments

If paying off or refinancing debt is not an option, you must agree on who will make payments for the obligation. If your ex-spouse is responsible for the debt, you can require that the payment be set up as an automatic withdrawal from a bank account or a payroll tax deduction.

Dividing marital debt is a contentious part of any divorce. You can consider different arrangements to reach an agreement.